How to Manage Crypto Investments Using a Stop-Loss Strategy
Managing investments in the volatile crypto market requires smart risk management, and a stop-loss strategy is one of the most effective tools to help you avoid heavy losses.
A stop-loss is a pre-set order to sell a cryptocurrency when it reaches a specific price. This helps limit your losses if the market moves against your position. For example, if you buy Bitcoin at $30,000 and set a stop-loss at $28,500, your position will automatically sell if the price drops to that level, preventing deeper losses.
Here's how to apply a stop-loss strategy:
Choose the Right Level: Don’t set it too close to your entry price. Give the market room to move. A 5–15% buffer is common, depending on the asset's volatility.
Use Binance's “Stop-Limit” Order: In the Binance app, go to "Trade" > select your coin > choose "Stop-Limit" > enter the stop and limit prices and confirm.
Adjust Over Time: As your asset increases in value, adjust your stop-loss higher to lock in profits—a method known as a trailing stop.
Using stop-loss orders helps protect your capital, removes emotion from trading, and adds discipline to your investment strategy.