Methods of How to Set Bitcoin Stop Losses in Bitcoin Trading

Traders using a Bitcoin system must have mathematical calculations that reveal where their stop loss order must be placed.

One can also set a stop loss order according to the indicators used to set these stop loss orders. Certain indicators use mathematical calculations to calculate where the stop loss orders should be set so that to provide an optimal market exit point when trading Bitcoin. These chart indicators can be used as the basis for setting these stoploss orders.

Other Bitcoin traders online also set these stop loss orders based on how much risk they are willing to take for a certain amount of reward. This way of setting these orders depends on doing some math using the price changes on the BTCUSD chart. For example, a trader might use a stop-loss of 30,000 points if the trade could make 90,000 points in profit, which is a 3:1 risk-reward ratio. Also, a trader might use a stop loss of 30,000 points, or $30, if the trade could make 90,000 points, or $90, in profit, which is a 3:1 risk-reward ratio.

Other traders just use a pre-determined % of their total trading equity balance.

To set a stoploss order it is best to use one of the following strategies:

1. Percentage of BTCUSD Trading equity balance

This method is based on the percentage of the account balance that the trader is willing to risk on any one single BTC USD Crypto trade. If a trader is willing to risk 2% of their account balance - then the trader determines how far he will set the stoploss order level based on the trade size which he has bought or sold.

Example:

If a trader has got a $50,000 account and is willing to risk 2 %

If the trader buys 10 contracts

1 pip = $0.01

Then setting at 2 %

2 % is $ 1,000

1000 /0.01 = 100,000 points

Stop loss = 100,000 points equal to $100

If the trader buys 20 contracts

1 pip = $0.02

Then setting at 2 %

2 % is $ 1,000 dollars

1000 /0.02 = 50,000 points

Stop loss = 50,000 points equal to $50

If the trader buys 40 contracts

1 pip = $0.04

Subsequently setting the protective stop at a 2 percent level.

2 % is $ 1,000 dollars

1000 /0.04 = 25,000 points

Stop loss = 25,000 points equal to $25

2. Setting Stop Loss using Support & Resistance Zones

Another method for setting stop losses is by using support and resistance zones on BTCUSD trading charts.

Because stop loss orders tend to cluster around important areas, when the price reaches a support or resistance level, it triggers many other orders, like a chain reaction. Stop Loss orders are often placed just above or below the resistance or support areas.

A resistance/support level should be like a barrier for BTCUSD price movement, this is why they're used to place stop losses, if this barrier is broken then the BTCUSD price movement can move toward the in the opposite market direction of original Bitcoin price trend, but if this barriers (support & resistance areas) are not broken, then the BTCUSD market will continue moving in intended direction.

Stop Loss Setting using a Resistance Level

Set Stop Loss on Bitcoin Trades - Pick Stop Loss Spots on BTC Charts

Placing StopLoss Orders above the Resistance Level

Stop Loss Setting using a Support Area

How to Establish Stop Loss Orders for Bitcoin - Setting Bitcoin Stop Losses

Placing Stop Loss Orders below the Support Area

3. Setting Stop Losses Using Trend-lines

A trend line can help set stop losses: place the stop loss just below the trend line in an uptrend and above it in a downtrend. If the trendline holds, a btc/usd trader can keep making money while setting a stop loss to protect profits if the trendline breaks.

Strategies of Setting Bitcoin Stop Losses on BTCUSD Charts Described

Putting the stop loss order below the BTCUSD price trendline

Here's a simple example: use trend lines in an upward-trending Bitcoin market to figure out exactly where to set your stop-loss order.

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