It is a very solid and well-known trading strategy. Basically, I am talking about protecting profits to avoid risking losing what has already been gained.
The function you are looking for on Binance to do this is the Stop Loss, which I have already mentioned, and also the Trailing Stop, which is even more efficient for this strategy.
How to Do This on Binance
Here is a step-by-step guide to set up this protection in your operations, using both tools:
1. Using the Stop Loss (Stop-Limit Order)
This is the simplest way to protect your profits.
Example:
You bought a crypto for $100 and it rose to $120. To ensure a profit, you can set up a Stop-Limit.
* Go to the trading page of the crypto you are operating.
* In the orders section, select Stop-Limit.
* Field "Stop": Put the price that, if reached, will trigger your sell order. For example, $115.
* Field "Limit": Put the selling price of your order. To ensure that the sale is executed, place a value slightly below the "Stop", such as $114.90.
* Field "Quantity": Put the amount of the crypto you want to sell.
* Click on "Sell".
What will happen? If the crypto price drops to $115, your sell order at $114.90 will be activated. Thus, you ensure a profit, even if the price continues to fall.
2. Using the Trailing Stop
This is the function that perfectly aligns with your strategy. The Trailing Stop follows the price increase and automatically adjusts your Stop Loss.
Example:
You bought the crypto at $100. If you want to protect your profit with a 5% margin, you set up a Trailing Stop.
* Go to the trading page and select Trailing Stop.
* Field "Activation": Put the price at which the Trailing Stop should start functioning. For example, if the crypto rises to $110.
* Field "Callback Rate": Define the percentage of "pullback" that you are willing to accept. In your example, the drop from $120 to $115 represents about 4.16%. You can set a "Callback Rate" of 5%.
* Field "Quantity": Put the amount you want to sell.
What will happen?
* The price rises from $100 to $120. The Trailing Stop is active.
* If the price starts to fall, from your peak of $120, and hits a drop of 5% (that is, falls to $114), the sale order will be triggered.
* If the price continues to rise, for example, to $150, your Trailing Stop will adjust and the selling price will now be $142.50 ($150 - 5%).
This is the best way to ensure profits while allowing the operation to run to take full advantage of the price increase.
If you have any more questions, feel free to ask!