Stop Loss Bitcoin Order Trigger Bitcoin Price
The most important question about setting your stop loss bitcoin order is how close or how far the stop loss cryptocurrency order should be set from the bitcoin price where you entered the position. Where you set this stop loss bitcoin order depends on several factors:
Since there are no bitcoin rules set in stone as to where you should place your stop loss cryptocurrency order, we follow general guidelines used by Bitcoin traders to help them calculate where to place this stop loss bitcoin order correctly.
Some of the general guidelines used to set stop loss crypto orders are:
1. Percent Risk Per Bitcoin Trade - How much a trader is willing to lose on a single bitcoin trade. The general trader rule is that a trader should never lose more than 2 percentage of the total trading account capital on any single bitcoin trade transaction.
2. Cryptocurrency Market Volatility - this refers to the daily bitcoin price range of bitcoin price movement. If a bitcoin price movement of a crypto instrument routinely moves up and down in a range of 50 pips or more over the course of the day, then you cannot set a tight stop loss cryptocurrency order. If you do, you may be taken out of the open bitcoin trade position by the normal bitcoin market volatility.
3. Bitcoin Risk to Reward ratio - risk reward ratio this is the measure of potential reward to risk. If the bitcoin market conditions are favorable then it is possible to comfortably give your bitcoin trade more room when setting stop loss cryptocurrency orders. However, if the Bitcoin market is too choppy it then becomes too risky to trade bitcoin without a tight stop loss bitcoin order then do not make the trade at all. The risk to reward ratio is not in your favor and even setting a tight stop loss will not guarantee profitable results. It would be wiser to look for a better bitcoin trading to trade at another time.
4. Bitcoin Position Size - if the bitcoin position size traded is too big then even the smallest decimal bitcoin price movement will be fairly big in risk percentage terms. This means that as a trader you have to set a tight stop loss cryptocurrency order which may be taken out more easily by the btcusd trading market. In most cases it's better to adjust to a smaller bitcoin position size in order to give your bitcoin trade more space for fluctuation, by setting a reasonable stop loss while at the same time reducing the risk percent per trade.
5. Bitcoin Trading Capital - If your cryptocurrency trading account is undercapitalized then you will not be able to set your stop loss cryptocurrency orders accordingly, because you will have a large amount of your bitcoin capital invested in a single bitcoin trade position which will force you to set tight stop losses. If this is the case, you should start thinking seriously about whether you have enough trading bitcoin capital to trade the bitcoin market in the first place.
6. Cryptocurrency Market Trend Conditions - If the bitcoin market is trending upward, a tight stop loss bitcoin order might not be necessary. If on the other hand the bitcoin market trend is range bound and has no clear direction then you should use a tight stop loss bitcoin order or not trade at all.
7. Cryptocurrency Chart Time Frame - the bigger the btcusd chart time frame you trade, the bigger the stop loss level should be. If you were a scalper bitcoin trader then your stop loss cryptocurrency orders would be set tighter than if you were a bitcoin day trader or a bitcoin swing trader. This is because if you are a bitcoin swing trader and you determine the bitcoin price will move up it does not make sense to set a very tight stop loss bitcoin order because if the bitcoin market swings a little your tight stop loss cryptocurrency order will be hit.
The method of setting a stop loss bitcoin order that you choose will significantly depend on what type of trader you are. The Method of how to set a stop loss cryptocurrency order, that you choose should also follow the above guidelines, and as a trader you should apply these guideline to your Bitcoin Trading Method.
