For beginners 🕵️ Explanation of stop loss and taking profits in spot trading on Binance 💡
Stop loss and taking profit are essential tools in trading that help you minimize losses and secure profits automatically. These tools are very useful in spot trading on the Binance platform, where you can set specific levels at which sell or buy orders are executed automatically.
What is a stop loss?
A stop loss is a sell or buy order set at a specific price to reduce your losses if the market moves against your expectations.
Example: You bought a coin at a price of $10 and want to minimize your losses if the price drops. You can set a stop loss order at $9. If the price drops to this level, the coin will be sold automatically.
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What is taking profit?
Taking profits is a sell or buy order set at a specific price to secure your profits if the market moves in the expected direction.
Example: You bought a coin at a price of $10 and expect it to reach $12. You can set a take profit order at $12 to automatically sell the coin at that price.
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How to use stop loss and take profit in spot trading on Binance:
Steps to set a stop loss order:
Log in to the Binance platform.
Go to the spot trading interface.
Choose a trading pair (like BTC/USDT).
Specify "Stop-Limit" in the order type.
Fill in the following fields:
Stop: The price at which the order is activated.
Limit: The price at which the order is executed.
Amount: The quantity you want to sell or buy.
Press the "Sell" button (to sell) or "Buy" button (to buy).
Example:
You bought a coin at a price of $10.
You want to set the stop loss at $9.
Specify:
Stop Price: $9.10.
Limit Price: $9.
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Steps to set a take profit order:
In the spot trading interface, choose "Stop-Limit".
Fill in the fields as follows:
Stop: The price at which the order is activated.
Limit: The price at which the sale is executed.
Amount: The quantity you want to sell or buy.
Press the "Sell" button (to sell) or "Buy" button (to buy).
Example:
You bought a coin at a price of $10.
You expect it to reach $12.
Specify:
Stop Price: $11.90.
Limit Price: $12.
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The difference between "Stop-Limit" and "Market Order"
Stop-Limit: Allows you to set precise stop and execution prices, but may not execute if the market does not reach the specified price.
Market Order: Executes the order at the current market price as soon as it is activated.
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Tips for using stop loss and take profit orders:
Specify your risk level: Do not risk more than 1-2% of your capital in each trade.
Analyze the market: Use technical analysis tools to identify optimal support and resistance levels.
Avoid greed: Do not set taking profits at very far levels or stop loss too close.
Update orders: Regularly review orders based on market changes.
Gift in the pinned post ❤️
helps you protect your capital.
Taking profit helps you secure gains.
Using these tools wisely is considered one of the basics of trading.
