Stop loss or limiting loss is actually a safety valve to prevent loss. This service (function) is often used to determine the right time to exit a trade by traders working on the stock market with a short and medium-term perspective. These people use Stop loss to stop trades or limit their profits and losses. Of course, sometimes a stop loss order can work in profit or even at the zero to zero point. In the continuation of this article from Official Website Digital Currency Signal, we will further examine stop loss and how it can be used in trading strategies.
How important is the use of stop loss?
The future is unpredictable! Risk is present in all open trades and cannot be ignored. Determining how much you can lose depends entirely on your attitude toward the market. Each trader must have a special strategy for himself and determine his loss limit accordingly. Let us illustrate the importance of this service with an example. Note that you bought a share at a price of 1,200 Tomans and set your loss limit at 1,000 Tomans. Suppose the parts are up to 1700 tons. In this case, you have obviously made a lot of profit. But suddenly the sector is likely to drop in price.
If you still keep your loss limit at 1000 tomans, you will not only lose your profit, but you will also suffer losses. So it is very important to change the stop loss value when the stock moves.
Factors that determine the extent of loss
One of the influential factors in determining the stop loss is the characteristics of the investor in terms of risk perception and his time perspective in investing. The main influencing factors are:
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Change the position of the loss limit to a higher or lower point (move the loss limit).
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Support trend lines or important stock price fundamentals
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Fibonacci
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Two layers
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Elliott waves
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noisy model
Types of Stop Loss in crypto Currency
Due to the differences in the nature of digital currency markets, we will specifically examine the different types of stop loss in this volatile market.
1. Full Stop Loss
In this method, when you choose a moratorium until the payment reaches that debt, all your assets will be liquidated. This is not a zero or hundred or all or nothing strategy. In such a case, if you buy bitcoins or any other asset and reach the price limit, you no longer have bitcoins. This strategy has advantages and disadvantages. Generally, traders use this strategy in stable markets with the possibility of sudden and unexpected fluctuations. Traders use this strategy when they feel that the price will reverse the downtrend and keep the price below the target range. The disadvantage of this type of strategy is that if the price moves above the specified stop loss for a few minutes and then returns to the previous trend, the trader loses a potential profit.
2. Partial Stop Loss
Maybe you also don’t have a good feeling about the complete stop loss method because this method also destroys the chance of profit. This method does not have a final and complete solution, but you can use methods that do not lose the potential profit if the price returns from the loss point. In the incomplete stop loss or partial stop loss method, only part of the asset is liquidated when the price reaches the limit specified by you. This strategy ensures that you still have a portion of your assets and that the price reaches a point set as a stop loss and returns to the previous trend. This strategy helps to ensure that the profits of the trade are not lost in volatile markets. The disadvantage of this method is that if the price does not recover, the remaining part of your asset in the transaction will experience a drop in value and you will lose.
Traders often use this method as a loss control tool in a highly volatile market, but it cannot guarantee the safety of a trader’s assets. Therefore, you should use a stop loss, fully understanding that the risk of this method is still high.
3. Trailing Stop Loss
This stop loss method in digital currency is adjusted according to fluctuations in asset prices. The trader specifies an amount, which is the difference between the current price of the asset and the value of the stop loss. If the cryptocurrency price increases, the stoploss value will also increase with it. When the price falls, the stop loss value does not change, and when it reaches the stated price, a stop loss order is created and the trade is terminated. This method of stopping losses, especially in cryptocurrencies, has many advantages over the previous two methods because it allows the trader to limit losses no matter how much the trend turns in the trader’s favor. In addition, it saves the trader from manually setting the stop loss.
What is a crypto currency signal and how to use it?
A digital currency signal is actually a set of instructions sent by professionals to users suggesting what digital currency to buy, at what price to buy, at what price to sell and finally at what point to limit them. loss set. These brands recommend companies that the service providers themselves have researched and therefore believe have high potential for profit.
A crypto currency signal consists of stop loss and take profit signals that automatically close your trade position when the price is reached. In some cases, these conditions may be changed frequently to reduce risk or increase profit during trading. For example, if the price moves a certain amount in the direction of the forecast, you can execute an order to move the stop loss point to the breakeven point.
Digital currency signal team is a collection of experienced finance, investment and technology professionals who are committed to providing simple, efficient and specialized solutions for cryptocurrency enthusiasts, combining technology and finance so that people of all backgrounds and backgrounds can work in investment and business in various areas of digital currency. With several years of experience in the financial markets, Digital currency signal has managed to earn itself a good track record. We claim to provide the Best Free Crypto Signals.
