Discover How Stop-Loss Order is Essential for Your Cryptocurrency
Traders and investors go for many strategies when they have to trade digital assets like cryptocurrency. They want to keep themselves updated with the changing trends and ensure they follow the correct method of mining their currency.
We all know that loss is a primary part of the trade due to the turbulent nature of the crypto market. No matter how many techniques you use, it is going to happen. We are not saying this to make you run away from trading crypto; we are making you aware of how to counter this problem. The answer is through a Stop-Loss Order. Being a bitcoin trader, it is one of the essential steps that is required in your crypto trading strategy because it provides you with a foolproof plan of not drowning yourself in debt. Let’s learn more about this and how it can benefit you and other traders.
A Stop-Loss Order
A stop-loss order is an understanding with a stockbroker to trade a specific stock once it hits the required pricing. It is developed to make an estimate of the investor’s loss on the position of security. For instance, if you put a stop-loss order at 15% less than the price at which you purchased the stock, you will limit your loss to 15%. Let’s say you purchased Tesla shares (TSLA) at $30 per share and immediately entered a stop-loss order for $26. If the price of the stock reaches a value of less than $26, then the shares will be sold at the previous price of the market.
Trailing Stop
Stop-loss orders don’t only save you from avoiding a loss, and they can also increase your profits. In this method, the stop-loss is estimated at a rate which is below the current market rates. The rate of stop-loss modifies as the price of the stock fluctuates. Utilizing a trailing-stop let, you run profits while simultaneously ensuring you some of the realized capital increment.
Perks of Having a Stop-Loss Order
- It does not cost you anything to set a stop-loss order.
- You will be charged once your stock reaches the stop-loss value and is sold.
- You think of stop-loss as a free insurance policy.
- You don’t have to monitor your stocks consistently for the stop-loss to work. It is beneficial when trading part-time or on time off from work.
- It also helps you make neutral decisions based on the next steps you need to take when your investment ends. People tend to get emotionally involved with their stocks and get an attachment. This is a disadvantage, especially for crypto, because long-term crypto trading has more uncertainty than short-term.
At the end of the day, no matter what strategy you use, you should be vigilant of the market trends and use a stop-loss order to your advantage.
Final Thoughts
Using a stop-loss order is essential when you have multiple stock investments. Doing so in cryptocurrency trading can help you recover from unexpected losses while you continue investing in other financial assets. Accepting the fact that loss is a part of the trade is the first step towards applying for a stop-loss order. Make sure you keep an eye on the changing market trends while continuing your trade.
**
DISCLAIMER
The views, the opinions and the positions expressed in this article are those of the author alone and do not necessarily represent those of https://www.cryptowisser.com/ or any company or individual affiliated with https://www.cryptowisser.com/. We do not guarantee the accuracy, completeness or validity of any statements made within this article. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author. Any liability with regards to infringement of intellectual property rights also remains with them.