Risk is everywhere, but we can minimize it by taking precautions. We all know that the crypto market is known for the wildest swings and craziest fluctuations. So this type of volatility is both helpful and dangerous for the investors, which is the reason stop loss plays a big role in this condition. Stop loss is just not useful for the crypto market, but it is highly used in the stock market and in the forex market. If you want to be a smart trader, then you cannot trade without using a stop loss tool, and this way you can minimize your loss, and this is a great way to protect your money.
So, what stop loss actually is so it is a kind of instruction that you give to any particular exchange where you are trading, that will close your order automatically at a certain price that you decide, so it is a setting that automates the selling process of your trade. Here I want to give you example that lets say you buy hive at the price of 0.3 and you set a stop loss at 0.28 then whenever the market reach there the order close automatically so here you are saving yourself from big loss because if market drop further more you will have to pay the heavy price that is why you have to close your trade with small loss.
When you see other markets then they are not always available, but Crypto is available 24/7, and also there is no weekend off like other markets, so that means the price may crash anytime. Let's say you are sleeping and the price crashes, then you can be in a big loss, but if you have set the stop loss order, then you don't need to worry about it because it is like a safeguard for you and watches the market for you. It closes the position as you set.
Also, traders place in emotion so if you want to save yourself from emotional trading, then yes top loss is helpful for you. In this market we have seen that even one little announcement or one little tweet has crashed the whole crypto market so at that time you do a panic and as you know that panic selling is always dangerous so in this situation you must have a great tool that is called stop loss tool.
you have to be smart when you use a stop loss tool because sometimes you might face unnecessary losses because you set a stop loss that closes easily during small dips. Also, setting topless to set in stop loss too far from the enterprise is also not good, so you have to maintain this. Here you can take the help from the technical analysis and see the support and resistance level, and this will help you to set your stop loss at the best price.
So these are the benefits of the stop loss tool and if you want to manage your money because money management is very important in the trading also risk management so if you want to do both things then stop loss is must for you what is your opinion regarding this information let me know the comment section me faiz signing off and definitely meet you in next blog.
