A stop-loss strategy helps traders minimize potential losses by automatically selling an asset when it reaches a predetermined price. To use it, first decide your entry price and how much loss you’re willing to accept—commonly 1–5% below your purchase price. Set the stop-loss order slightly below a key support level to avoid being triggered by normal market fluctuations.
For example, if you buy Bitcoin at $30,000 and want to risk 3%, place your stop-loss at $29,100. You can also use trailing stop-losses, which move with the market to lock in profits as prices rise.
Stop-losses are especially useful in volatile markets like crypto, where prices can change rapidly. Always combine this strategy with good risk management, like only investing a small portion of your capital per trade. Remember, stop-loss helps protect capital, but doesn’t guarantee profits—use it as part of a broader trading plan.
