Breakeven is the price level at which a trade or investment generates neither a profit nor a loss, accounting for the entry price and all associated costs such as commissions and spreads. Traders frequently move their stop-loss orders to the breakeven point after a trade moves in their favor, effectively eliminating risk on the position while allowing for further profit potential. In options trading, the breakeven point includes the premium paid for the contract.
Example
“After the stock moved up $2 in his favor, he moved his stop-loss to his breakeven price of $52.10 to ensure a risk-free trade.”