Stop-loss strategies are essential tools for managing risk in trading—especially in volatile markets like crypto. They help limit potential losses by automatically closing a trade when the price hits a certain level. Here are some common stop-loss strategies:

1. Fixed Percentage Stop-Loss

How it works: Set a stop-loss at a fixed percentage below (long) or above (short) your entry.

Example: You enter a long trade at $100 and set a 5% stop-loss. If the price drops to $95, the trade closes.

Best for: Beginners or those who want a simple, consistent rule.

2. Support/Resistance-Based Stop-Loss

How it works: Place your stop just below a support level (long) or above a resistance level (short).

Why it’s smart: It uses technical analysis to place stops where the price is less likely to go—unless a trend is reversing.

3. Volatility-Based Stop-Loss

How it works: Use indicators like ATR (Average True Range) to set stops based on current market volatility.

Example: If the ATR is 2%, you might set your stop 2x ATR (4%) below your entry.

Best for: Adapting to changing market conditions.

4. Trailing Stop-Loss

How it works: This moves with the price. If the price moves in your favor, the stop follows—but it doesn’t move back down.

Example: You set a trailing stop 5% below the current price. If the price rises, the stop rises with it.

Best for: Locking in profits during strong trends.

5. Time-Based Stop-Loss

How it works: Close the position if it hasn’t moved as expected in a certain time frame.

Why it helps: Avoids tying up capital in dead trades.

Bonus Tip: Combine Strategies

You can combine these—for example, using a support-based stop with a trailing mechanism to secure gains as the trade moves.

#StopLossStrategies