Stop loss for Bitcoin
Cryptocurrency trading has gradually migrated from specialized exchanges to trader terminals, a transition that has significantly improved trading convenience.
With significantly more options for managing trades, traders can now do more than simply buy bitcoins and wait for them to rise in price. They can
also use various automated trade management tools and hedge risks.
This includes using a useful tool like a stop loss, the necessity of which has long been widely accepted in exchange trading.
A stop loss in bitcoin trading helps protect an investor's deposit and prevent losses greater than planned.
- Why is it important to set a stop-loss for Bitcoin?
- How to determine the stop order size
- An alternative that allows you to preserve profits
Why is it important to set a stop-loss order for Bitcoin?
This cryptocurrency is one of the most dynamic, as it has enormous liquidity.
Its price can fluctuate by several percent, sometimes as much as 10%, within a day.
Considering the use of leverage, a loss on a single trade can easily wipe out your deposit unless you constantly monitor your trading.
Setting a stop loss allows you to close the trade automatically once the loss reaches the level you set.
How to determine the stop order size
The tactics for setting a stop loss here are not particularly different from those applied to other currencies, so you can follow similar approaches:
• By level – set a stop at the nearest strong level, for example, right now this could be $5,000 per Bitcoin. We set the stop loss slightly below this level, 4950.
• By minimums and maximums – for buy trades, a stop loss can be set at the previous day's price minimum or another time period if you're trading on shorter time frames.
For sell trades, we focus on the price maximums for your time period.
You can read about minimums and maximums here - http://time-forex.com/interes/minimumy-maksimumy-forex
Profit-Maintaining Alternative
It can be frustrating when an already profitable trade closes with a stop-loss loss. If you trade in a trader's terminal, you can avoid such troubles.
The first option is to move the order into the profit zone. This means that if your position is already profitable, you simply change the stop-loss to a more favorable value; you can set it at the penultimate low (or high) of the price.
The second option is to use a trailing stop, which will automatically move the stop along with the price, rather than manually doing it each time.
Learn more about using a trailing stop here - http://time-forex.com/praktika/kak-vystavit-trejling-stop
Try to minimize your risks when trading cryptocurrencies like Bitcoin, especially since there are now plenty of opportunities to do so.
