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Key Tips for Setting Stop Loss on Bitcoin Orders

Set Bitcoin stop losses wisely. Avoid spots too close or too wide. Skip exact support or resistance lines. Place them a few pips below support or above resistance.

For a long position on BTC USD crypto, find support below your entry and set the stop loss 20,000 to 30,000 points lower - that's $20 to $30 since 1,000 points equal $1 in Bitcoin. The chart below shows where a BTC/USD trader might place stop losses under the support area.

Set Stop Loss Orders for Bitcoin - Key Tips for Stop Loss Placement

Place your stop loss at the support line for a buy on the BTCUSD chart.

If you're going short (selling BTC USD Crypto Currency pair), just look for a nearby resistance level which is above your entry point & set this order about 20000 to 30000 points - which is about $20 to $30 (1,000 point movement in Bitcoin price is equivalent to $1), above that resistance level. The example illustration revealed below shows the level where a trader can set up their stop loss order just above the resistance level on a Bitcoin trading chart.

Set Bitcoin Stop Loss Orders - Ways to Place BTC Stop Losses

Determining the appropriate Sell Stop Loss point based on the Resistance Level for a BTCUSD transaction.

Furthermore, utilize stop orders not solely for loss mitigation but also for securing realized trading gains.

The advantage of a stop loss order is that you don't have to monitor the market on a daily basis how the price chart is performing. This is especially handy when you're in a situation which stops you from monitoring your open trades for an extended period of time, or when you want to go to sleep after trading Bitcoin the whole day, but leave that 1 BTCUSD trade open.

The problem with a stop loss is that the price where you set these orders might be reached by a brief change in the BTCUSD price. The important thing is to choose a stop loss percentage that lets the BTCUSD price change normally during the day while limiting possible losses.

Traditionally, stop losses are implemented to prevent or cap losses, hence their name. However, these orders serve an additional purpose: securing existing profits, in which case the order is termed a trailing stop loss order.

A trailing stop order is positioned at a specific percentage distance below the existing BTC USD Crypto market price. This trailing stop loss level adjusts dynamically as the trade position progresses profitably. Employing a trailing stop loss permits profits to accumulate while simultaneously ensuring that if the market reverses course, a definable portion of your gains will have already been secured.

Stop-loss orders can also help manage risk if you're making a profit on a Bitcoin trade. If your trade earns some good money, you can adjust the stop-loss to the point where you first bought the BTCUSD pair. This way, if the price changes and goes against you, you won't lose any money: you will just break even on the Bitcoin trade.

Trailing stops help lock in gains as BTCUSD climbs. They limit losses if the price drops.

A good example of an indicator which can be used to set a trailing stop is when you use the parabolic SAR chart indicator & keep moving your stop loss order to the parabolic SAR level.

Set Stop Losses in Crypto Trades - Use Bitcoin Tools for Stops

Parabolic SAR for Setting Trailing StopLoss in Bitcoin Trading

Traders often shift their stop loss order by a fixed number of pips. They do this every few hours, every hour, or every 15 minutes. The choice depends on the time frame of the Bitcoin chart for BTCUSD trades.

In the example illustration exhibited above the parabolic SAR which had a setting of 2 and 0.02 was used as the trailing stoploss order level for the above chart. The trader would have kept shifting the trailing stop level upwards after every SAR was plotted until the time when the Parabolic SAR was hit & the trend reversed.

Conclusion

While it is a straightforward mechanism, numerous market participants overlook the utility of a stop loss. It serves a dual purpose: mitigating substantial downside while securing accrued gains, making it advantageous across virtually all investment approaches.

Points To Remember When Setting Stop Losses

Here are some crucial points to remember:

Pay close attention to where you place stop-loss orders. For instance, if Bitcoin generally fluctuates by 20 points, setting your order too close to this range might result in being stopped out due to standard volatility.

Stop Loss orders take the emotions out of the trading decisions & by setting a stop loss you set a pre-determined point of exiting and getting out of a losing trade, meant to control losses and preserve your equity.

Bitcoin traders can always use technical indicators to calculate where to set and place these stop loss levels, or use the concepts of Resistance and Support levels to figure out where to set these stop-losses. Another good indicator used to set these orders is the Bollinger band indicator where traders use the upper and lower band as the limits of price therefore placing these stop loss orders just outside these bands.

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