Stop loss for Bitcoin
Cryptocurrency trading gradually migrated from specialized exchanges to trader terminals; such a transition has significantly increased the comfort of trading.
Since there are significantly more options for managing transactions, now a trader can not just buy bitcoins and wait for them to rise in price.
And also apply various automatic methods of managing transactions and insuring risks.
Including using such a useful tool as stop loss, the need to install which in exchange trading has long been disputed by no one.
Stop loss when trading bitcoins allows you to protect the investor’s deposit and prevent losses greater than planned.
- Why is it important to set a stop loss for Bitcoin?
- How to determine the size of a stop order
- An alternative that allows you to save your profits
Why is it so important to set a stop loss for Bitcoin?
This cryptocurrency is one of the most dynamic, as it has simply enormous liquidity.
The rate may change during the day by several percent, and sometimes by as much as 10%.
If we take into account the use of leverage, then losses on one transaction can easily leave you without a deposit, provided that you do not constantly monitor the trading process.
Setting a stop loss will allow you to close the trade automatically as soon as the loss reaches the target you set.
How to determine the size of a stop order
The tactics for setting a stop loss here are not particularly different from those that apply to other currencies, so you can follow similar options:
• By levels - set a stop at the nearest strong level, for example, now it could be $5,000 for one bitcoin. Stop loss is set slightly below this level 4950.
• By lows to highs – for buy trades, the stop loss can be set at the low price level for the previous day or another time period if you trade on shorter time frames.
For sell transactions, we respectively focus on the price highs corresponding to our time period.
Read what minimums and maximums are here - http://time-forex.com/interes/minimumy-maksimumy-forex
An alternative that preserves profits
It can be a shame when an already profitable transaction is closed with a loss due to a stop loss. If you trade in a trader’s terminal, you can avoid such troubles.
The first option would be to move the order to the profitability zone, that is, if your position already has a positive result, you simply change the stop loss value to a more profitable one, you can set it at the penultimate minimum (maximum) of the price.
The second option is to use a tool such as trailing stop; it will allow you to automatically move the stop following the price, rather than doing it manually every time.
Read more about using trailing stops here - http://time-forex.com/praktika/kak-vystavit-trejling-stop
Try to reduce your risks as much as possible when trading a cryptocurrency such as Bitcoin, especially since now there are a lot of opportunities for this.