When we talk about stop loss, the main goal is to protect capital and reduce the negative impact of large market fluctuations. Here are some effective strategies you can use with simple examples:
1. Setting traditional stop loss orders
This method relies on identifying a specific point; if the price reaches it, the asset is sold automatically.
Example:
I 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 be sold automatically to avoid larger losses.
2. The stop loss percentage based on capital
Set a fixed percentage of the capital that you can afford to lose before stopping trading.
Example:
If you decide to risk only 2% of the capital on each trade, and you have $1000, this means you will stop the loss at losing only $20.
3. Trailing Stop Loss
This method relies on automatically adjusting the stop loss point 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 its direction.
4. Diversifying the portfolio to reduce risks
Instead of putting all your capital into one asset, you can diversify your 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. Using technical analysis to determine support and resistance levels
Technical analysis helps identify 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 let your decisions be emotional while trading. Use clear and predefined strategies, and always be ready to execute them without hesitation!
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