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What is a Stop Loss in Crypto Trading?

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If you are afraid of investing money in volatile crypto trading or are tired of losing money, then you have nothing to worry about. Ignorance can be the biggest reason for losing money, because sometimes we ignore some things, due to which we have to suffer. Some new investors and traders may have some problems in the beginning. Some big crypto trading exchanges provide you with stop-limit features and stop-loss features, with which your life will be easier, these features are not more complicated. In this blog, we have thought of creating a quick introductory guide. So, if you are planning to trade or mine Bitcoin, then you may visit thecryptogenius.io .

So, let’s know about its features to know more about it as well as how it helps in preventing losses in crypto.

What Is A Stop Loss?

By reading the name of stop-loss, you must have known, that it is a feature that is provided in crypto exchanges so that you can stop or reduce the loss in trading. After all, we start any new business to make a profit and not to lose our money. Stop-loss orders are set through exchanges and are executed automatically only if certain conditions are met.

For example, let’s say the price at which you bought your bitcoins and after that, you hold it for some time and its price rises after some time then your chances of making a profit will increase, but the same If the price of coins goes down you will lose. In such a scenario when these prices start to move lower, then the loss is minimized by using the stop-loss feature. In this case, the amount of the sell order is set which is less than the actual purchase amount. The use of stop-losses can reduce the losses for the trader when there is a significant drop in the price of the crypto.

If you want to understand its value, you can sleep at night without setting a stop-loss, and after that, the price of BTC will start falling and within a few hours you will see a drop of a few per cent in the price you bought. But at the same time, if you use stop loss on your computer, then you can reduce the risk in it even by staying away. A full stop-loss is called when you put the amount to be sold in this position. There are several other types of stop-losses, also known as partial stop-losses, but these involve triggering a stop-loss order or deciding to sell a certain amount of crypto. This type of stop-loss is considered very important in crypto as it is more volatile.

What is the stop-loss limit?

A lot of people might get confused in the terminology but you need not get confused because both stop-limit and stop-loss orders are the same things. Once you reach the stop price, a limit order will be created for you to buy or sell at a better position.

Here are the meanings of some of the terms:

  • When the existing price arrive the stop price, then a stop-limit order will be executed to buying or selling at a superior price.
  • It consists of a quantity to buy or sell with a stop-limit order.
  • Limit Price This is the price at which the stop-limit order is executed.

Conclusion

With stop-loss, you are given complete freedom. The crypto market has helped you to manage risk during turbulent times. With this, you are provided with such a facility, that you do not need to sit in front of your computer. To get a profit, you have to use its facility wisely, so that you can stop losses and make a profit.

 

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