Configuration of stop commands for risk management in cryptocurrency
Cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) have drawn considerable attention in recent years because of their high liquidity and their increasing hypothesis by institutional investors. However, the volatility of these assets can be intimidating, especially with regard to risk management. An effective way to mitigate potential losses is that stop-loss orders determine profits or limit losses.
What are the arrest losses?
A Stop-Loss command, also called “loss of stop” or “stop limit”, is an automatic negotiation decision which is made when the market reaches a certain price level, generally under a specific objective. This type of order aims to limit potential losses by preventing additional sales pressure on the asset.
Why configure cryptocurrency stop orders?
- Risk management : Order orders help manage the risk by limiting potential losses or determining a minimum profit objective.
- Diversification : You can diversify your cryptocurrency portfolio by determining stop orders and reducing the overall risk.
- Protection against market volatility : orders constantly can protect your investments in periods of extreme volatility on the market.
Configuration of stop losses for cryptocurrency
Follow the following steps to configure an -L ose stop order in the cryptocurrency:
- Select a broker or an exchange : Select a serious exchange such as Coinbase, Binance or Octopus or use an online broker like Etoro.
- Select the assets : Select the cryptocurrency you want to act and make sure it is listed in your favorite exchange.
- Set your price to stop-loss : Determine the price at which you wish to make the stop-loss order, e.g. B. 10% or 20% below your entry price.
For example:
- If your Bitcoin control price (BTC) is $ 50 and you have set a loss of stop at $ 40, the Stop-Loss order will be made automatically when the price reaches $ 40.
- Adjust several levels : Consider defining several levels of stop-loss orders to block benefits or limit the losses at different prices of assets.
Best practices to configure the stop commands -Los
- Use a renowned or exchange broker : Select a secure and reliable platform that supports loss of stop.
- Define the Clear input and exit criteria : Define certain input and exit conditions such as price objectives and risk management parameters.
- Activity of the surveillance market
: continuously monitor the cryptocurrency market in order to adapt your stop orders accordingly.
Example of a loss of stopping
- Buy Bitcoin (BTC) for US dollars
- Attach a loss of stop from 20% to $ 48 ($ 8 per share)
- Sell Bitcoin (BTC) for 48 United States
By creating stop orders for risk management, you can protect your cryptocurrency investments and make good decisions at the time of purchase or sale.
Exclusion of responsibility
This article is only used for general information purposes and should not be considered investment advice. The cryptocurrency markets are very volatile and are subject to considerable price fluctuations. Always contact a financial advisor before participating in commercial activities.
Remember that risk management is of essential importance for a successful cryptocurrency. By configuring the stop commands, you can take control of your portfolio and navigate the risks associated with this strong wealth class.