#StopLossStrategies

A stop-loss strategy is used to automatically sell an asset when its price drops to a certain level, helping limit potential losses or protect gains. Here's a breakdown of how to use it effectively:

---

1. Types of Stop-Loss Strategies

a. Fixed Stop-Loss

Set a specific price or percentage below your entry point (e.g., 10% below).

Example: Buy ETH at $3,000, set stop-loss at $2,700 (10%).

b. Trailing Stop-Loss

A dynamic stop that moves with the price. It "trails" the asset upward and locks in gains.

Example: Trailing stop set at 10% — if the price goes to $3,500, stop-loss trails up to $3,150.

c. Time-Based Stop-Loss

Exit the trade after a certain period if the asset hasn't moved favorably.

d. Volatility-Based Stop-Loss

Set wider stops for volatile assets and tighter stops for stable ones.

---

2. How to Set a Good Stop-Loss

Based on Technical Levels: Support zones, moving averages, trendlines

Risk Tolerance: Don’t risk more than 1-2% of your total capital per trade

Asset Volatility: Adjust stop distance based on historical price swings

---

3. Example Strategy

Let’s say you invest $1,000 in a crypto asset:

You decide on a 5% stop-loss.

If the asset drops to $950, the position closes automatically.

You preserve most of your capital and avoid emotional decision-making.

---

4. Tools & Platforms

Most platforms like Binance, Coinbase Pro, and TradingView offer built-in stop-loss orders.

You can also combine them with take-profit levels for full trade automation.