Trading Lesson: Stop loss Strategies

[sujonali1819]

Op you well explained the strategies. It's really a useful strategy for the professional trader. But who has not much knowledge about it and can not set the order accurately should not use it. So always try to learn first and use the strategy later.

I have also created a trade-in long ago about stop loss. you guys may take a look there if you have much time : [GUIDE] How to place stop-loss sell order.

[tbterryboy]

It's really a useful strategy for the professional trader. But who has not much knowledge about it and can not set the order accurately should not use it. So always try to learn first and use the strategy later.

What is setting the order accurately? You mean placing limit-order? Yes, traders must know the differences between market order and limit-order. But, most exchanges are now having different UI to let their traders to place orders what they actually need to do and preventing accidental wrong type of orders. For example, for market orders, you cannot set price level but only for setting size, you are allowed to. This way anyone can easily work with stop-loss orders with limit type of order placement, I guess

I have also created a trade-in long ago about stop loss. you guys may take a look there if you have much time : [GUIDE] How to place stop-loss sell order.

Wow, that is really awesome that you people have contributed for traders of this community in more effective way as well. Thanks a lot for sharing this link, I find it is really a worth to go through so that I could make my trading knowledge better with respect to stoploss handling in my cryptocurrency trading.

[nelson4lov]

Having a stop-loss order in place is very helpful should the trade go in the opposite direction. This way, you can decide how much loss you can take before closing the trade. Stop loss comes in very handy especially when there's high volatility in the market.  For instance: Yesterday,  Binance announced that they'll be delisting 3 assets (ARN, LUN and FUEL). Now, These assets had pumped in recent time so some traders might still have opened trades for these markets. After the announcement , they all plunged about - 30%. This happened in a very short amount of time as people panicked sold. Having a stop loss in a scenario like this would limit the losses especially if you were not active during the time of the announcement.

A similar case is that of Bitcoin when it dropped over 40% in late February- early March. The benefits of stop loss cannot be overemphasized. It's an essential ingredient in every trader's toolbox. Be careful to not put it too tight though else you might get stopped and then the market continues in the direction you expected it to go just not with your order included in the ride.

Kudos to OP on the read. Its packed with good information. Thumbs up.

[MCobian]

This topic really helped me to find out more details about the stop-loss strategy, and I agreed without using stop-loss in the end
the profits we can get and the capital we have is likely to run out. Especially for newbies I suggest to understand how to use stop-loss
properly. Without the right stop-loss strategy that we use will not run optimally.

For technical strategies Based on almost all traders understand that placing a stop-loss is usually below the support price. Then related
to time based strategies I have never use it, apparently after reading the explanation in the opening post, i realize this strategy is very
important. So that we can switch to other coins if the target is selling we are not reached within the time we set. For the third strategy
I have a different opinion regarding percentage based, in my opinion minus 8% is too big. I choose if the coin drops to minus 5% I will
immediately do cutloss.

[GreatArkansas]

OP, I really appreciate your thread. I am really a fan of using stop-loss and this should be a must for all traders, even they are just starting or learning.
I also created a thread that just like this last year of August, if you mind, you can also visit my thread, they are almost the same concept, showing the importance of using a stop loss.
My thread before: One of the Best Weapons in Trading

[perfect999]

OP, I really appreciate your thread. I am really a fan of using stop-loss and this should be a must for all traders, even they are just starting or learning.
I also created a thread that just like this last year of August, if you mind, you can also visit my thread, they are almost the same concept, showing the importance of using a stop loss.
My thread before: One of the Best Weapons in Trading

I actually saw yours and it is a nice one and thanks for bumping it so more people can see the thread.

I have a little problem with stop-loss strategy and that is once you set stop loss you are basically going to prevent loss, right but you are also working against yourself because you are expecting the trade to go wrong and sell off the asset to manage loss. But, think of a scenario where you sold off the assets and then the price later started to grow again then you regret because what could have been a neutral or positive trade was forced to be a negative trade because you chose to stop your loss. This is quite similar with panic selling when bitcoins go down. Right?

[el kaka22]

Honestly after getting into long term holding based trading in this cryptocurrency space, I literally forget to make use of stop-loss things in my trading. Thanks for providing a chance to walk through the old memories; even I am familiar with what is stop-loss and how to use it in trading, your topic provided another chance to evaluate whether I am doing right with my trading or not. For example, I did not go for booking profits when it hit $19k levels but I at least should have exit by the times of $15k and then should have bought back when prices were trading below $4k. I mean even in long term trading, if I went for making use of stop-loss then I might have got chances to multiply my bitcoin stash into at least 3 times.

[GUIDE] How to place stop-loss sell order.

One of the Best Weapons in Trading

Thank you guys, for contributing to this community on what exactly traders here need. If someone works on indexing these kind of good topics, that would be really helpful for many traders for sure.

[TitanGEL]

OP, I really appreciate your thread. I am really a fan of using stop-loss and this should be a must for all traders, even they are just starting or learning.
I also created a thread that just like this last year of August, if you mind, you can also visit my thread, they are almost the same concept, showing the importance of using a stop loss.
My thread before: One of the Best Weapons in Trading

I actually saw yours and it is a nice one and thanks for bumping it so more people can see the thread.

I have a little problem with stop-loss strategy and that is once you set stop loss you are basically going to prevent loss, right but you are also working against yourself because you are expecting the trade to go wrong and sell off the asset to manage loss. But, think of a scenario where you sold off the assets and then the price later started to grow again then you regret because what could have been a neutral or positive trade was forced to be a negative trade because you chose to stop your loss. This is quite similar with panic selling when bitcoins go down. Right?

I think you misunderstood the concept of stop loss, the reason why we are putting it is not because we are expecting to lose; it is just a strategy wherein if our bias went wrong or the market turned tide against us then we can prevent huge losses using stop loss. Traders have set of rules after all and I'm now well discipline, I do not regret whenever I cut my trades and when its price start to recover again. I have different plans in different scenarios so basically my execution is base on what I planned.

[Paycoinzzz]

Thank you very much for sharing your stop loss for many members here, actually speaking where determining the stop loss is very difficult. You have helped me expand my daily trading experience. Besides, I would like to talk more about how to set a stoploss so as not to be scanned by the shark. For sensitive periods, you should only use the x10 lever and set the stoploss level to about 100 pips higher than the pivot point. That is the experience that I have learned after 3 years of trading in this crypto market. Hope it helps the new traders here.

[yhiaali3]

For me I will rely on the number 3 to determine the stop loss (Percentage based.), I think that setting the stop loss on a percentage of the price will be the best, I did not like the way to determine the loss by time because if I set the stop loss after 5 days of the deal it will be sold at Low and the price may go up after that.
Anyway, thank you. You did a great job, and a very good explanation supported with pictures.

[Dilerium90]

Usually, other market participants make money just on stop losses. I mean scalpers and day traders. A huge number of participants put stop-losses there, where you say - under the support line. But the market is not ideal and very often your stop-losses can knock out and then market moves in your direction, but without you.

[DevilSlayer]

The explanation is good and it is really easy to understand but I'm sure that it is not easy to master, I think the OP proved that the debate over stop loss are already finished because there are still a lot of self proclaimed professional traders who are not using any kind of stop loss strategies where they say that stop losses are not important. I'm sure that if they read this, their perspective to stop loss will quickly change.

For sure I will not survive in the market for a long period of time if I didn't learn to use it. I experienced to loss huge money when I still do not aware on what it is. The reason why I adapt it in my trading system is simply because for me to not experience again huge losses like before.

[Insanerman]

I'm very thankful that there are still people believing on stop loss because there are some people telling that using stop-loss is useless.
Newbies should really learn this first when they want to start trading, cryptocurrency, or non-crypto currency. This is a MUST for me when we do trading.
Risk management is important in trading and we can achieve it with the help of course of using stop-loss.

There are a lot of newbies that are not using any strategies on trading. They did not want to stop their loss because they believe that some other day, the coin will just be pumped up. They do not realize how much they did lost already. Plus it is not guaranteed that the coin will just go up again later. Some of them do not realize that and just sticking to be a believer to the coin.
Though I believe they will realize that and learn from it sooner or later. Cutting loss is very essential on trading and that must be realized by every trader.

[justdimin]

Stop Loss would be basically the last hope in trading, if you get it activated that means your trade is officially over and you are not going to get anything profitable on that one. Sure it is a good method that you should use in order to not lose even more money, but that is just the "not horrible, just bad" part of the situation, it still is not a good thing.

I agree that sometimes you should prepare for bad stuff and stop loss is one of them but I decline that it is the only way. If you do not get in with all of your money, you could still find another method. For example you have 1000 dollars that you want to buy bitcoins with, buy 500 dollars worth and keep the other 500, the more the price falls the more you buy, is it 8k? buy another 100 dollars, is it 7k? buy another, by the time your money is over that is 5k and you will have a lower average.

[Leo]

Stop loss is good to use but not in all cases, if you are the type who do trade on future trading you will know that sometimes its better not to use stop loss. Stop loss hunting is real, and you can loose all your capital if you keep entering after getting stopped. I've seen a case mostly whereby exchange will hunt for stop loss and pump it up after most of the SL got triggered. I seldomly use it, most especially when trading on futures

[Rebisco]

Stop loss is good to use but not in all cases, if you are the type who do trade on future trading you will know that sometimes its better not to use stop loss. Stop loss hunting is real, and you can loose all your capital if you keep entering after getting stopped. I've seen a case mostly whereby exchange will hunt for stop loss and pump it up after most of the SL got triggered. I seldomly use it, most especially when trading on futures

You can lose more if you do not have stop loss, the OP explained it very well so I'm sure that SL works very well and it is important to learn. When we do trading, protecting our capital is our main goal and our second priority should be gaining money. It is the main reason why we should focus on having SL in every trade. Think about it, what if you do not have stop loss for sure you will incur huge more losses.

[Emitdama]

I feel if you've got fewer skills in trading long-term investment or stop loss are going to be less likely to lose. you've got to find out the trading rules well and avoid greed to prevent the loss strategy Greed always results in evil.

Usually all emotions related things will lead you to meet stop-loss lol ; To avoid this, like you mentioned long term should be the simple solutions. Yes, I am a long term trader hence I never needed stop-loss functionality in my trading.

If making use of stop-loss is too hard and requires all skills then we can simply skip it by opting the positions to hold for longer duration. I mean you do not need to square off your positions at stop loss; you may leave it open for long term so that market will recover. It is possible only when we trade at spot markets.

I've seen a case mostly whereby exchange will hunt for stop loss and pump it up after most of the SL got triggered. I seldomly use it, most especially when trading on futures

This is how whales do manipulate the markets to eat up your stop-loss levels. Sudden spikes are usually the manipulations to hit the stop-loss and you get you away.

When we do trading, protecting our capital is our main goal and our second priority should be gaining money. It is the main reason why we should focus on having SL in every trade.

But your protecting way should not be in a way to reduce your capital over the time. I mean when you TA is not good and you keep hitting SL more frequently then making use of SL is not at all has any sense. Whenever I face a SL, then I will go working on finding what was wrong with my SL. So, that my next trade will not be the repeation of same mistake; this way I will recover my SL losses with next trade itself at most of the times.

[TitanGEL]

Thank you guys for making this thread so informational! I will update this thread with new lesson which is "how to use trailing stop". Preserving our profits will be our focus, it is an advanced strategy but for sure all of you will get it easily.


I'm happy to see that there are now a lot of traders like you who are willing to use stop loss strategy and I'm grateful that all of you treat it as important when it comes to trading. Stop loss is part of risk management. We cannot achieve financial freedom if we do not want to learn it and use it when we do trading.

[Shasha80]

Very useful topic, because many people when trading do not use the stop loss strategy. Finally suffered a big loss
and say trading is not for everyone, which is worse will blame coins that have been purchased. With the learning
stop-loss feature this has finally opened everyone's mind. And finally many people now use the stop-loss feature
when trading.

[coinfinger]

Stop loss is part of risk management. We cannot achieve financial freedom if we do not want to learn it and use it when we do trading.

Yes, it is really pathetic that many people do not understand the importance of having risk management in their trading. I have seen many people are sharing like they never need to use stoploss because they are ready to hold. But, in my view that cannot be a right way of trading because time is very important factor in trading and when you're ignoring it then definitely you are missing the big opportunities for the same capital amount.

I'm not sure everyone will be having enough money to get locked in one opportunity and making use of other money in some other opportunity. If you want to make use of your money in more efficient way then you should go for making use of stoploss because it will definitely save a lot of your time and other required efforts.

many people when trading do not use the stop loss strategy. Finally suffered a big loss and say trading is not for everyone

Honestly trading is not suitable for the traders who are ignoring the basics of risk management. We cannot do anything about such people who are ignoring to make use of stoploss strategy and then leaving off crypto trading completely. In some sense it seems they deserve it .