Stop Loss and usage in crypto trading

A stop-loss order is an excellent risk mitigation tool that an investor can use to protect their portfolio. An investor who wants to limit his losses can activate a stop-loss order to minimize investment losses from a sharp drop in asset price.

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Traders apply stop loss to positions because it is cheaper to implement, helps limit the size of losses, less monitoring, and peace of mind because it is done automatically.

On the other hand, some do not use a stop loss on orders because market volatility can trigger the execution of the stop loss so that the price rises again and returns the position to a profit if not closed.

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The stop loss must be executed at the exact price, nothing more, nothing less. If the market moves in your favor; If it moves against you, a limit will be set and if the price reaches it, a market order will be activated.

To set a stop loss order, you must first analyze the financial asset you want to trade with, thus, you will have a clear view of whether its price is likely to move against you. There is a possibility. Likewise, it will help you understand at what price you will order.

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Risk classification of various businesses is important for accurate identification, effective assessment, proper management, and monitoring and control. Thus, we will discuss different types of threats below. Internal factors and External factors.

A major advantage is that many platforms allow you to manually cancel stop-loss orders if they do not reach the specified prices. You can also specify the duration you want it to be active.

🤔 What do you think about stop loss as a risk mitigation tool?

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🤔🤔 Is it better to set a stop loss while trading and exit the trade as soon as the stop order price is activated or do you prefer to keep your trading position open even though you are at a loss because you are sure Will the market recover and will you return to profit?

In most cases where you didn't set a stop loss, were you able to recover and get back to your cost price/profit, or were you unable to recover and lost both your margin+collateral?

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