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What is Stop Loss in crypto trading?

4 Mins read

When we talk about any trading or business, both the possibilities of profit and loss are equal. Every trader or person in the industry needs some mechanism that minimizes the chances of loss to avoid a significant downfall. The same case implies in the crypto world. The crypto traders are more desperate to find a way that prevents their additional losses. And if we say honestly, then the only reason behind trading is to make profits.

What is Stop-loss?

A stop-loss is a newfangled and latest order which is in usage by traders that helps them in the prevention of additional losses. On reaching the specific point, the order automatically gets triggered. Once the market attains a pull-back, this stop loss enables trade funds to trigger and get out of the current position. Since the cryptocurrency market is volatile, stopping losses has become an imperative feature for every trading service. This has become a universal technique for risk management.

An overview of Stop-loss Crypto

Stop-loss orders are especially relevant for crypto traders, given that cryptocurrencies are incredibly volatile and the market hasn’t matured yet. Stop-loss is a tool specially designed for trading. It limits the loss by automation. This automation liquidates the assets after the market price reaches its specified value. Depending upon the crypto market situation and variable scenarios, the stop loss crypto can be divided into multiple types. Stop-loss crypto can also be very useful for newbie traders that feel it challenging to make decisions regarding the market outcomes. The most trending and helpful trading tool to succeed in trading crypto would be setting stop losses.

Cryptocurrency Stop Loss
Cryptocurrency Stop Loss. Photo by Kanchanara on Unsplash

To have experience giving significant profits when trading digital currencies like Bitcoin and Ethereum, you need to avoid and escape significant losses in volatile trades, which is common in the crypto market. A stop-loss order works by automatically shutting a crypto position when the price strikes a pre-determined level. Stop-losses are vital for risk management; traders can estimate what position size to take and how much money to risk in a single trade. A prominent trading position could potentially wipe out most of your gains. The best stop-loss strategy is to set them for every trade you have, especially when trading crypto.

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Stop Loss Crypto Types

Full stop loss crypto

As the name indicates, this type liquidates total assets when triggered. This type is commonly used in the stable market where even spontaneous non-usual price fluctuations will keep the predicted price drop low. During setting a full stop loss, it should be kept in mind that the reward and risk of both scenarios are equal opportunities.

Partial Stop Loss crypto

When triggered, this type liquidates only a specified proportion of the digital crypto assets. Partial stop loss is valuable in a volatile cryptocurrency market, ensuring that some assets remain even after the price drop. The drawback of this type is that the left assets are many times not the necessity of the trader, and a continuous low level of prices may get these into a loss.

Trailing Stop loss crypto

This type has the unique feature of adjusting stop-loss value according to the asset’s price fluctuations. The rise in cryptocurrency price also raises the stop loss value with it. This benefits the trader because he doesn’t have to adjust stop loss according to the market manually.

What is a Stop-Limit Order?

A stop-limit order is a more advanced and complex order that helps traders by giving protection to their positions. The stop-limit order merges a stop order with a limit order. When the cryptocurrency touches the stop price set by the trader, it automatically triggers a limit order. Next, the limit order is executed at the set limit price or better.

Working of Stop Limit Order

The limit order is different from the market order in the execution manner.

The market order executes the instruction immediately; however, the limit order executes when the cryptocurrency touches a certain level.

Stop Loss in Crypto Trading
Stop Loss in Crypto Trading. Photo by olieman.eth on Unsplash

In other words, the stop-limit order is a risk management tool that gives traders more control over the price at which the order should execute. This order may work in volatile markets, so it’s very relevant for cryptocurrency traders.

Benefits of using Signals Blue

Although the stop losses cryptocurrency or the stop limit crypto seems to be helpful in the crypto trading yet, it requires a complete word from the trader to manage it. One of the best providers of cryptocurrency telegram signals, Signals Blue, provides the best cryptocurrency services by giving its users high-quality telegram crypto signals. Not only this, but it also provides us with a variety of features that have made its name in the crypto world. Signals blue has solved this stop losses problem by giving us a whole automated feature.

Cornix Automation

This feature is Cornix Automation. Cornix is one of the most popular auto-trading solutions. Using the Cornix service linked with Binance, KuCoin, or Huobi, you can automate the whole trading process based on signals with success. Crypto trading bots have become highly famous among millions of cryptocurrency users. Cornix is a crypto trading bot working automatically for crypto signals groups on telegram with several valuable functions. Crypto signals are the group of skilled traders who will tell you how to trade to generate profits. A trading bot places buy and sell orders for buyers. When these crypto signals are combined with Telegram crypto trading bots, there are significant advantages like more effortless trade execution, automated trading opportunities, etc. The main advantage of the Crypto trading bot Cornix is that it saves time in notifying the results of trading the users both on positive and negative sides. You can also automatically execute crypto targets with Cornix.

By providing its users with this feature, Signals Blue has saved their manual efforts and saved time by kicking out the problems of stop losses automatically. Using Signals blue, the user does not have to worry about stop losses and doesn’t have to react manually to the market changes.

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