When we talk about stop-loss, the main goal is to protect capital and reduce the negative impact of significant fluctuations in the markets. Here are some effective strategies you can use with simple examples:

1. Set traditional stop-loss orders

This method relies on setting a specific point where if the price reaches it, the asset is automatically sold.

Example:

You bought a cryptocurrency at a price of $100. You can set a stop-loss order at $90. If the price drops to $90, it will automatically sell to avoid larger losses.

2. Stop-loss ratio based on capital

A fixed percentage of capital that you can afford to lose before stopping trading.

Example:

If you decide to risk only 2% of your capital on each trade, and you have $1000, this means you will set the stop-loss at a loss of only $20.

3. Trailing stop-loss

This method relies on adjusting the stop-loss point automatically as the price moves in your favor.

Example:

If you bought an asset at $100 and the price rose to $110, the stop-loss can automatically move to $105 to secure partial profits in case the market reverses.

4. Diversify the portfolio to reduce risks

Instead of putting all your capital into one asset, you can diversify the portfolio to reduce the negative impact of losing a specific asset.

Example:

Invest 50% in stable coins, 30% in medium-risk coins, and 20% in high-risk projects.

5. Use technical analysis to determine support and resistance levels

Technical analysis helps in determining optimal entry and exit points.

Example:

If there is a strong support level at $95, you can set the stop-loss order just below this level (for example, at $93) because if this support is broken, the price may drop significantly.

My personal advice

Do not make emotional decisions while trading. Use clear and predefined strategies, and always be ready to implement them without hesitation.

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