What Is Breakeven?
Breakeven is the price at which a trade or investment generates zero profit and zero loss. For a spot trade, breakeven = entry price + trading fees. For a leveraged position, breakeven also includes funding costs. For options, breakeven = strike price + premium paid (for calls) or strike price - premium paid (for puts).
How Breakeven Works
Breakeven isn't just a price level — it's a risk management tool. Moving your stop-loss to breakeven after price moves in your favor turns a risk position into a free trade. The "breakeven stop" eliminates the possibility of a loss on the trade, allowing you to let the remaining position run for additional profit with zero downside risk.
Why It Matters for Traders
Calculating breakeven precisely is essential for every trade. Many traders underestimate total breakeven because they forget fees, slippage, and funding costs. On a leveraged perpetual position with 0.05% per 8-hour funding, holding for 3 days costs 0.45% just in funding — shifting your breakeven significantly. Always factor in all costs when planning trades.
