Trading Bitcoin Choose a Stop Loss Bitcoin Order Level
How to choose you stop loss level the target stop loss should be based on various strategies depending on your type of bitcoin trading method.
The three methods of choosing stop loss levels are:
Strategies and Techniques of Setting Stop Loss BTCUSD Orders in Bitcoin Trading
Traders using a bitcoin system must have mathematical calculations that reveal where the order must be placed.
A trader can also set a stop loss bitcoin order according to the indicators used to set these orders. Certain technical indicators use mathematical equations to calculate where the stop loss cryptocurrency order should be set so as to provide an optimal exit point. These technical indicators can be used as basis for setting these orders.
Traders also place these orders according to a predetermined risk to reward ratio. This technique of setting is dependent upon certain math equations. For example a ratio of 50 pips stop-loss can be used by a trader if the trade has the potential to make 100 pips in profit: this is a risk:reward ratio of 2:1
Other traders just use a predetermined percent of their total bitcoin trading account balance.
To set a stop loss it is better to use one of the following methods:
1. Percentage of BTCUSD trading account balance
This stop loss setting method is based on the percent of account balance that the trader is willing to risk when trading.
If a trader is willing to risk 2% of account balance then the trader determines how far he will set the stop loss bitcoin order level based on the trade size which he has bought or sold.
Example:
If a trader has a $10,000 account and is willing to risk 2%
- If the trader buys 1 mini contract
1 pip = $1
Then setting at 2%
2% is $ 200
2. Setting Stop Loss Bitcoin Orders using Support & Resistance Areas
Another way of setting crypto stop loss cryptocurrency orders is to use supports and resistance levels, on the bitcoin charts.
Given that stop loss bitcoin orders tend to congregate at key points, when one of these levels is touched by the bitcoin price, other cryptocurrency orders are set off. Stop loss orders tend to accumulate just above or below resistance or support levels, respectively.
A resistance or a support area should act like a barrier for the bitcoin price movement, this is why they are used to set stop losses, if this barrier is broken the bitcoin price movement can go towards the opposite direction of the original bitcoin trade, but if this barriers (support and resistance levels) are not broken the bitcoin price will continue moving in intended direction.
Stop Loss BTCUSD Order Level Setting using Resistance Level
Setting stop loss bitcoin order above the resistance level
Stop Loss Bitcoin Order Level using Support Level
Setting stop loss bitcoin order below the Support Level
3. BTCUSD Trend Lines
A Bitcoin trendline can be used to set stop losses where the stop-loss cryptocurrency trading order is set just below the bitcoin trend line. As long as the bitcoin trend line holds the trader will be able to continue making profits while at the same time set this stop loss cryptocurrency order that will lock his profit once the bitcoin trend line is broken.
Setting stop loss bitcoin order below the bitcoin trendline
Example of where to set this stop loss bitcoin order using Bitcoin trend lines.
