Stop Loss Bitcoin Order Summary: Points To Remember When Putting

The key to placing stop loss orders in bitcoin trading isn't to set too close or too far and not exactly on the support resistance areas.

A few pips(points) below the support or above the resistance areas is the best place.

If you're going long (buying a bitcoin instrument), just look for a nearby support level that is below your trade entry point and place this order about 10 to 20 pips below that support zone. The example shown below show the level where one can put their stop loss orders just below the support level on a bitcoin chart.

Support Level for Putting Stop Loss Bitcoin Order Level for Buy Bitcoin Trade - How Do You Set Bitcoin Stop Losses?

Support Level for Placing Stop Loss Bitcoin Order Level for a Buy Trade

If you're going short (selling a bitcoin instrument), just look for a nearby resistance level which is above your entry point & set this stop order about 10 pips to 20 pips above that resistance level. The example illustrated below show the level where one can put their stop orders just above the resistance level on a bitcoin chart.

Resistance Level for Placing Stop Loss Bitcoin Order Level for Sell Bitcoin Trade - How to Set Bitcoin Stop Losses

Resistance Level for Placing Stop Loss Bitcoin Order Level for a Sell Trade

You can also use stop loss cryptocurrency orders to lock in profits, Not Just for Preventing Losses

The advantage of a stop loss cryptocurrency order is that you do not have to monitor on a daily basis how the btcusd market is performing. This is especially handy when you're in a situation that stops you from watching your trades/transactions for an extended period of time, or when you as a trader want to go to sleep after trading the whole day.

The disadvantage is that the bitcoin price at which you put these stop orders could be activated by a short term fluctuation in bitcoin price. The key is picking a stoploss order percent which allows bitcoin price to fluctuate within the day to day range while capping the down side risks.

These orders are traditionally thought of as a way to cap losses thus the title. Another use of these stop loss orders is to lock in profits, in which case it's known as a trailing stoploss order.

For a trailing stop order it is put at a percent level below the current market bitcoin price. This trailing level then shifted as the trade transaction position unfolds. Using a trailing stop loss level allows you to let profits run while at the same time ensures that should the btcusd market turn you will have locked in some of your trading profits.

These orders can also be used to eliminate risk if a Bitcoin trade transaction becomes profitable. If a trade makes some substantial gains then the stop loss can be moved to break-even point, the point which you opened buy, thereby ensuring that even if the trade transaction position moves against you, you'll not make any loss, you will break-even on that trade position.

Trailing stop orders are used to maximize and protect profit as bitcoin price rises and limit losses when the bitcoin price falls.

A good example is when you use the parabolic SAR Crypto Indicator & keep moving your stop order to the parabolic SAR level.

Parabolic SAR Bitcoin Indicator for Setting Trailing StopLoss Bitcoin Order in Bitcoin

Parabolic SAR Indicator for Setting Trailing StopLoss Crypto Order in Crypto

Another example is where a trader moves his stop loss by a specific number of pips after every few hours or after every one hour or after every 15 minutes depending on the Bitcoin chart time-frame that the trader is using.

In the above example the parabolic SAR which had a setting of 2 and 0.02 was used as the trailing stop loss order for the above chart. The trader would have kept shifting the trailing stop loss level upwards after every SAR was drawn until the moment when the Parabolic SAR indicator was hit and the bitcoin trend reversed.

ConclusionA stop order is a simple tool, yet so many traders fail to use it. Whether it's used to minimize excessive losses or to lock in trading profits, nearly all trading styles can benefit from this trading tool.

Points and Factors To Remember When Placing These StopLoss Orders

Here are some important points to remember:

Be careful with the points and levels where you put these stop loss orders. If bitcoin normally fluctuates 20 points, you do not want to put your stoploss order too close to that range else you'll be taken out by the normal market volatility

Stop Loss Bitcoin Orders take the emotion out of a trading decisions & by setting one you set a predetermined point of exiting and getting out of a losing position, meant to control losses.

Traders can always use indicators to calculate where to set these regions, or use the concepts of Resistance & Support to decide where to set these stop loss orders. Another good indicator used to set these stop loss order orders is the Bollinger bands where traders use the upper & lower band as the limits of bitcoin price therefore putting these orders outside the bands.

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Stop Loss Bitcoin Order Summary: Points To Remember When Putting

You can also use stop loss cryptocurrency orders to lock in profits, Not Just for Preventing Losses

Points and Factors To Remember When Placing These StopLoss Orders