Why do they break stops on the stock exchange? Types of exchange orders
10.07.2012
Good afternoon, dear readers.
Just recently, a person wrote to me by email and talked about mysticism in trading. He explained to me that as soon as he opened a position (at that very moment, neither earlier nor later), the chart turned around and moved against him. After the stop loss was triggered, the market returned to its starting point, and the movement again became uniform and predictable.
A similar situation happened in approximately 80-90 percent of cases. However, no significant changes occurred even after the trading strategy changed.
In the same letter, he wrote to me the following: “I understand that the stock exchange is an independent entity, and it lives independently of the individual trader. This means that if someone has problems in trading, then the source of the problem is himself. But what or who pushes you to take action at the moment of turning the tide?”
The question is actually not at all strange. There are a huge number of other traders who have encountered this mystical problem.
Before answering the question, I would like to say that such situations have happened to me. I also once thought that a mysterious doll was watching all my stop orders. After all, he simply cannot live without me :) He sits and waits for me to place an order, and then he deliberately pulls the price up to my stop loss and knocks me out.
If you are now in this position, then you need to start actively thinking not about mystical phenomena, but about trading. Yes, often market makers, large traders, and stock market professionals deliberately drive the price to the level of order accumulation. But they don’t know exactly where your order is, they just know at which points most traders’ stop losses are more likely to be placed.
And to the question of who pushes a person to open a position at the most inopportune moment, there is only one answer. And this answer is the person himself, his psychology.
The actions of most novice traders on the stock exchange are the same. Trading is working on yourself, it is the ability to manage your actions and wait for a certain signal.
Unfortunately, the price chart very often hypnotizes novice traders. Therefore, all trading positions of the majority of inexperienced people who have succumbed to the temptation of making a quick profit very often open in the same zones.
I don’t know how long you have been trading, but from my own experience I can say that only novice traders suffer from this problem. I went through this myself and understand perfectly what is at stake.
There are 2 most common causes of this problem.
1. If you trade through various dealing centers that supposedly provide access to the international forex market.
I’ll say right away that most of the offices are illegal establishments, the main goal of which is aimed at taking money from novice traders. The triggering of stops in this case may be due to the fact that the broker sees all your orders and specifically leads the market in the direction of a cluster of orders for a short-term period. This usually occurs in the form of a sharp jerk.
In broker manipulations, you need to distinguish between 2 cases: a sharp movement against you and a smooth one. If the movement was sharp, then we can still talk about the “conscientious” work of the broker. But if the movement against you was smooth, then most likely this is a real movement. In most cases, no one draws candles.
If you encounter such a problem when trading through a dealing center, then you should think about switching to more centralized exchanges, such as MICEX-RTS.
But it is important to pay attention to the fact that most people face a similar problem not only on the Forex market, but also on the stock exchange. In this case, we move on to the second reason.
2. Inability to understand and see the market.
The main problem for beginners is to place their stop losses where, according to its logic, the market is most likely to return.
Trading is, one might say, the work of taking money from each other. Professional traders, large banks, and hedge funds know where stop orders are placed in most cases, and they lead the market there without any problems by placing their orders in advance.
Often such manipulations occur without much difficulty, because small traders will eventually run out of all their cash reserves anyway. In this regard, it is much easier for large traders - they have more money :)
So, your stop loss is an order that any professional trader will happily eat. At the same time, you think that the market specifically moved against you, that you are the only one. Although there are still a huge number of such people.
If changing the strategy does not help, then this only means that in all your strategies at your level of trading you are using the same rules of market analysis.
So here are my tips:
— switch to legalized exchanges (for example, such as MICEX-RTS);
— focus on understanding the market; think about why strong market movements occur; how money flows from one trader to another;
— based on the principles of market functioning, create a clear trading algorithm for opening/closing a position;
— strictly follow the rules of your trading system;
— record all transactions in the journal;
- if your stop loss is knocked out, then analyze how far the market went after your stop was triggered; if it touches you and immediately turns around, then think about expanding the stop; Most likely, you are placing it in the wrong place;
— work on the entry point, thereby automatically changing the location of your stop loss.
I hope that my tips will be useful to you.
Good luck with your development and all the best!
Sincerely, Alexander Shevelev.
Although, if a broker is cheating, he can make a transaction on your investment account without your application, but this is a broker’s mistake or a crime and a completely different story. There are different types of orders, and you determine the type of order based on certain considerations, taking into account your trading strategy.
Market order
A market order (order, order) is submitted when you want to buy or sell a certain number of shares at the best price from all orders currently in the queue of orders of the opposite direction. In other words, if you give an order to your broker to buy or sell something “on the market,” then the broker sends your request to the exchange, and it is executed if there are sufficient shares in the queue for sale or purchase, respectively. In this case, you buy the cheapest shares from this queue or sell at the price of the highest bid. Thus, a market order (market order) is an order for immediate execution at the best market price at the moment. A market order is placed when you want to make a transaction immediately, now.
It should be noted that immediate execution of a market order is practically guaranteed only for liquid shares, that is, shares for which trading turnover is high. For low-liquidity, that is, poorly traded shares, a situation may arise when there are simply no counter offers, and your market order will freeze until a corresponding offer appears. But what happens if your only market order to buy collides with the only market order to sell? :)) Probably, the price of the last completed transaction will be taken into account here.
Limit order
A limit order (limit order) is an order that specifies the price at which you want to buy or sell shares. In this case, your application is placed in the application queue. The order is determined by price. The better the price (for the other party), the closer to the front of the queue your application is placed. A queue is a living organism. Your application may be pushed closer to the end of the queue if someone submits an application at a more attractive price. For example, he will want to buy shares at a higher price or sell at a lower price. If your limit order specifies the best price (lowest for selling or highest for buying), then your order is placed at the very front of the queue and is the first candidate to be filled.
A limit order is placed when you want to buy or sell shares at a certain price, for example, to make a profit. For example, at one time you bought a share for 100 rubles. You want to earn 10 rubles from it. To do this, you place a limit order to sell your share at 110 rubles. If there are currently transactions on the market for your share of 150 rubles, then your order will be executed almost immediately (again, if it is a liquid, that is, traded share). If transactions on your stock take place at a price of 50 rubles, then your application will have to wait until the transaction prices approach 110 rubles, and this could happen in about five years :)). Or it will never happen! And then your application will hang until its expiration date. Or if the broker goes bankrupt by chance and closes his shop :))
Stop order
A stop order (stop order) is an order, the execution of which is postponed until the condition specified in it occurs. When the condition is met, the stop order is activated. A stop condition is, for example, a price at which the order becomes active and becomes a regular market or limit order. “Stop loss”, “take profit” - these terms refer to stop orders. It is believed that a stop order is placed to close a position when it is necessary to either sell a losing stock, so as not to further increase losses when the price falls, or take profit when the price falls again. Same thing in the opposite direction. However, stop orders are also placed to open a position. For example, you think that a certain stock, which is trading at a price of 100 rubles, is about to go up, and upon reaching the price level, say, 105 rubles. you agree to buy it, counting on further growth. Then you place a stop order to buy this security with a stop condition of 105 rubles.
Trailing stop
The condition under which an order is activated and becomes a regular market or limit order can be not only absolute, but also relative. You set a trailing stop condition on a security currently trading at RUB 100 to buy for RUB 5. Moreover, if the security reaches a price of 105 rubles, then your application will be activated. However, if the stock price goes down, your order will begin to follow the price. Suppose the price of a stock dropped to 80 rubles, stayed at this level for a while, and then turned around, began to rise and reached 85 rubles. Then your application will be activated at this level and you will be able to buy a share at a lower price, 85 rubles. Thus, you used a stop order to open a position, assuming that the stock would continue to rise in price, but the price initially fell, giving you the opportunity to purchase the stock at a lower price than when you placed your order.
When placing stop orders, it is important to take into account the effect of the so-called “slippage”, which occurs when the price moves quickly. Your order may simply not have time to be executed, and you additionally indicate the acceptable range within which you agree to execute the order, even at a worse price. If this is not done, then your order, once activated, may be executed, since the stock price has jumped past the threshold you specified.
Everyone is well aware that traders are often forced to spend 24/7 in front of the computer. This rhythm of life is exhausting, but what can you do – you don’t want to miss out on the best price for a coin, because then you risk overpaying for them. Stop! Better find out what the stop limit is - and be calm
What is Stop-Limit
So, stop limit– this is a very useful tool, without which it is quite difficult to imagine exchange trading, not only in cryptocurrency, but also in any other market. If we talk very simply about what a stop limit is, it can be described as a pending order. We decide at what price we would like to purchase the coin. If such a useful tool did not exist, we would have to constantly brew ourselves strong espresso, sit 24 hours a day in front of the monitor and wait until the price of the coin we have chosen reaches the required level. But how long would we last? It’s unlikely, because the forces are not limitless, and the body would still take its toll.
But fortunately, a stop order exists, and we can place this pending order, and then, with peace of mind, do other important things, being 100% sure - at the moment when the value of the asset reaches the value we require, the deal will be concluded, and we will not miss nothing important.
Of course, you can always do without a stop limit, but we don’t know for sure when the cryptocurrency price we need will move and it will reach the value we need. So here is one of two things - either we wait “by the sea of weather”, without taking our eyes off the chart, or we use the stop limit on the poloniex exchange, if you choose this cryptocurrency exchange. If you prefer Binance, great, the stop limit on the binance exchange is also present and can be used by traders when the need arises.
How does Stop Limit work on a cryptocurrency exchange?
It is possible to purchase cryptocurrency on the market at the current price, or later, at the price specified in the order. Despite all the imagination of the authors of science fiction works, no one has yet managed to create a time machine, and we cannot simply go and travel into the future. This means we will use a stop limit.
Purchasing coins is possible through the exchange platform that the trader chooses for himself. For EXMO it looks like this:
Let's look at a specific example. You have noticed very good prospects for investing in Ripple. At the moment its price is 1.4065. You only have $10 at your disposal, and you could buy Ripple right now, but after analyzing the market, you found out that in the near future the cost of this crypto asset could significantly decrease to the level of 1.20261. This means you can buy even more Ripple for the same money.
That's all, all that remains is to sit for an hour or two near the computer and wait for the Ripple price to drop to the level we need. And who will give you a guarantee that the cost reduction will occur within 1-2 hours? That's right - no one. Moreover, the event you need may not happen at all, and you will simply waste your time. So the best solution would be to place an order at 1.20261.
How to set Orders
There is nothing complicated about this:
- In the required field indicate XRP (Ripple)
- We choose XRPUSD, thus purchasing the Ripple we need for USD
- Let's move on to the functionality for trading, indicating the data we need:
But what happens if Ripple quotes do not drop to the level we specified? Nothing terrible - just the order will not be executed, and we will not buy the digital currency Ripple. But we would get the same result if we sat for hours in front of the computer, worrying and worrying. Do we need it? Of course not. So we can safely say that a stop limit on the stock exchange saves traders from visiting a psychologist, and perhaps even a psychiatrist
Stop Limit on Binance Exchange
Setting a stop limit on the Binance exchange turns out to be no more difficult than on any other exchange. Moreover, some users admit that the interface of this exchange’s website turns out to be more convenient for them, and the capabilities of Binance are pleasing.
Let's look at the screen:
Column 1 is the currency pair selection window, column 2 is the order book. We are interested in the third column, because it is there that we can set our stop order on binance.
We place orders at market value for sale and purchase, and we also place stop limit orders.
Stop Limit on the Poloniex exchange
For those traders who have been working with Poloniex for a long time, setting a stop limit is not a problem.
At the first stage, we will need to select the cryptocurrency of interest to us. Let's say it will be Digibyte
The second step is to indicate in the “Stop-limit” all the data, namely the cost at which the stop should be triggered, the cost of placing a sell order (Limit) and the number of crypto assets that we want to sell (Amount).
The third step is to click the “Sell” button.
All that remains is to confirm:
Stop Limit on other exchanges
Today, such a useful trading tool as the stop limit is available on almost all exchanges, and the process of installing it is not much different, except perhaps with some nuances.
Here's what it looks like on the Bittrex exchange:
Here we have set the “Buy when” condition – $3990, which means that as soon as the price of Bitcoin reaches this level, an order will be issued to purchase Bitcoin at a price less than or equal to $4000. This does not mean that you will buy Bitcoin for $4,000. This does not mean at all that you will buy Bitcoin for $4,000, because the system itself will choose the best purchase condition at the time of sale. But one thing is clear - the deal will not take place above this level, so if you suddenly get distracted from the trading process, and during this moment the price of Bitcoin soars to $9,000, you will still be able to conclude a deal on favorable terms.
conclusions
Should I use Stop-limit or not?
The answer to this question is beyond doubt, because not a single person is able to continuously monitor the market. But you don’t want to miss out on the best price to buy/sell.
Don’t worry - by setting a stop limit, you can be calm about the result. After all, even if the price of your chosen cryptocurrency does not reach the desired value, you will not lose anything.
Domestic investors/speculators, and many professional traders, know only 2 orders that they use - purchase/sale “from the market” (market), purchase/sale at a conditional price (limited).
Let's look at the type of stop orders in more detail:
Stop Limit.
Needed to limit losses (working on a breakout).
We buy Gazprom for 210 rubles. Based on the strategy, we set a stop loss (loss limitation) at the level of 200 rubles with a price of 198.50 rubles. for which an application will be submitted to the exchange. Those. when Gazprom shares drop to the level of 200 rubles, a sell order will be sent from the trading system server to the exchange at a price of 198.50.
Take Profit.
Fixation of profit with determination of the local maximum price.
We buy Sberbank on 06/20/2011 at 94.6 - and assume that it will rise within a couple of days to 96 rubles. That. set – activation price 96 rubles, offset from the maximum 0.50 rubles, protective spread 0.20 rubles.
Those. when the price reaches 96 rubles, the order is activated (“monitors” the market movement). A limit order is generated only when the price drops by more than 0.50 rubles from the local maximum (for example: after “passing” 96 - the market on 06/21/2011 “went down” to 96.6 - the local maximum). The price put up on the exchange will be taking into account the protective spread = price of the order to sell = 96.6 – 0.50 – 0.2 = 95.9. (On June 21, 2011, our Take Profit for Sberbank would have been fulfilled).
P.S. The system “catches” a local maximum, which the investor cannot accurately determine in advance!!! The maximum is fixed! They are determined by the program only after the price decreases by the amount specified by the trader; with smaller fluctuations, the system ignores them and does not place an order!!! IMPORTANT!!! => If intraday changes are smaller, the order will not be executed. And one more thing – the local maximum is tracked within 1 trading session. Those. if on the next day the market will open with a downward gap - the order will not be generated immediately... but the local (within this day) maximum will be calculated - indent - protective spread.
Stop order with a related order.
These are interconnected stop orders and limited in one direction (i.e. both to buy or both to sell), while the execution of one order (stop or limit) entails the cancellation of the other, to avoid double purchase (sale) .
For example: In May we bought Surgutneftegaz at 26.40 with a target of 28.95 (limit order), while limiting the loss at 26.05 (stop order: market level 26.05 (condition price), placing the order at 26 .00, also including a protective spread).
That. if the price goes up first, the limit order will be executed at a price of 26.95, and the stop order will be automatically canceled. If the price goes down first, then at the market level of 26.05 rubles, an order will be placed at a price of 26.00, while the limited order at a price of 26.95 will be cancelled.
P.S. Exhibited!!! ONLY!!! until the end of the session – i.e. it includes a limited order. Funds for it are blocked once.
Stop price for another security.
It is used to practice strategies where the condition for placing an order for one security is to achieve a given price for another security, or for placing orders similar to limited ones, but for several days.
Example 1: Suppose that we believe that changes in the Sberbank “pref” share occur with a delay relative to the “regular” one, using this correlation, we set a condition for the price for the “regular” 97 (current 95.6), at which the stock exchange will an order has been submitted to purchase Sberbank Pref at 72.3 (current 71.8) in the expectation that Sberbank Pref shares will continue to grow beyond the normal level.
Example 2: We want to sell Gazprom when the price reaches 250, the current price is 199. However, we will not be able to set a stop limit, because When selling, the price condition is less than or equal to something. Those. if we now set a stop limit for sale with a condition price of 250 at a price of 240 => the order will immediately go “to the market” (now the price is 199, which is obviously less than 250) and will be canceled at the end of the trading session, because There won’t be such a price on the market today...
What we do is set a stop on another security... Condition: if the price of Gazprom is greater than or equal to 250, we put Gazprom up for sale at 240.
Important!!! This type can be used to hedge a position when the price of a security falls, using futures as a hedging instrument for equity investments.
There is also Stop "on execution".
It is used both to limit losses and to fix profits... The essence is that without having yet bought/sold a security, we place an order for it to close the position. At the same time, the stop will not work until a transaction occurs on the base order))) Valid until the end of the session... If the base order is canceled, the “execution” stop is automatically removed. Funds for a stop order are blocked only after the base order is executed.
17.05.2018
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The volatility of cryptocurrencies makes trading a profitable strategy in the crypto market, but at the same time introduces an additional element of risk. A trader may not have time to conclude a deal at an advantageous moment, and on a deal concluded a minute later, lose a large amount, because the rate suddenly adjusted too much. In such, as well as in many other cases, a stop loss comes to the rescue. What is a stop loss in cryptocurrency trading and how to use it? Let's find out in this article!
How does stop loss work in cryptocurrency trading?
A stop loss in crypto trading is an order to a cryptocurrency exchange to automatically open an order to sell a cryptocurrency when the price of the cryptocurrency falls to a point specified by the trader.
Stop-loss order is an order issued by the exchange to sell cryptocurrency at a specified minimum price. Stop loss price is this price.
Let's say a cryptocurrency costs $100, a trader buys it, hoping that it will rise to $110. But he is wrong, and the currency falls to $95. If he sells it now, he will lose $5. He can wait until it rises above $100 again and sell then. But if the market falls, the currency may fall even more, and then the trader will lose even more.
Understanding this and the fact that mistakes happen, the trader determines in advance the maximum amount that he is ready to lose, and, accordingly, the minimum at which he is ready to sell the cryptocurrency.
Let him be ready to lose $10 and sell the currency at $90. He is no longer ready to lose $15 and sell it for $85. He sets a stop loss price of $90, and if the price falls to this level, the exchange automatically issues a stop loss order to sell at this price. The trader loses the allowable $10, but does not lose the unacceptable $15 or more.
Stop loss is used by many traders trading on different time periods, using different techniques and tools.
The above example is an example of using a stop loss on medium and long time periods . The described could happen within 20 minutes or, say, 5 hours. In the first case, the rate fell faster, so the stop loss was triggered after 20 minutes. In the second case, the rate fell more slowly and approached $90 after 5 hours.
Stop loss is also actively used in- the fastest possible trading.
Scalpers make a small profit on each trade, so it is important for them to limit their losses: otherwise, large losses against the background of small profits will put them in the red. Therefore, scalpers set the stop loss price as close as possible to the current one. Thus, the stop loss is triggered when the asset falls weakly, and scalpers' losses are minimized.
In a falling marketstop loss is used everywhere. All traders see cryptocurrencies falling, but no one knows how much and how sharply they can fall. Therefore, most people indicate the maximum allowable losses using a stop loss.
In a growing marketStop loss is used less frequently, but is set more often than not as a simple insurance policy..
When a trader opens a position, the exchange provides the option to fill out a stop loss field, and many believe that it is smarter to fill it out than not to fill it out. Filling out the field does not require anything, but in the event of an unpredictable trend reversal it can save money.
Stop loss is literally translated from English as “stop loss” or “stop loss”. The translation fully reflects the purpose of this tool.
Types of stop loss in cryptocurrency trading
Stop loss is used in different ways, in different situations, and therefore today has several varieties in different classifications.
- Break-even stop loss
The stop loss price is set at the position opening price. At best, the trader receives earnings, at worst, he remains with his money, since the exchange sells the cryptocurrency he bought at the same price at which the trader bought it. Feature: such a stop loss cannot be specified immediately. Exchanges set minimum acceptable gaps between the stop loss and the current price of the asset, so the trader will have to wait until the price of the cryptocurrency rises by the required number of points, and then move the stop loss to breakeven. For example, he buys cryptocurrency at $50 and sets a stop loss of $40 when opening a position. Then the cryptocurrency grows, the trader waits until it rises to $60 and sets a break-even stop loss of $50. This stop loss is used only in a growing market.
- Trailing stop loss
The stop loss price changes depending on the change in the price of the cryptocurrency. Theoretically, it can be adjusted by the trader himself; in practice, large exchanges can do this automatically. When setting an automatic trailing stop loss, the number of points is specified, after which the stop loss should be changed. For example, a cryptocurrency must rise 10 pips for the stop loss to increase; then another 20 points so that it goes up a second time, and so on. Often the trailing stop loss goes to levels that are higher than the purchase price. For example, a trader bought a cryptocurrency at $50 and set a stop loss price of $40. The cryptocurrency rose to $60 - the stop loss price rose to $50; the cryptocurrency rose to $70 - the stop loss price rose to $60 and so on. Most often, such a stop loss is used in a growing market to fix profits: if the price rises to $70 and the stop loss reaches $60, the trader will no longer receive less than $10 in profit.
- Fixed stop loss
The simplest option in this classification. It is not changed by the trader or the exchange and does not move anywhere. The trader simply determines how much he is willing to lose, sets the appropriate stop loss and trades. A fixed stop loss is usually used only for insurance, that is, the trader hopes that the stop loss will not be reached.
Another classification involves dividing stop losses according to the amount they affect.
- Full stop loss
Set for the entire transaction amount. For example, a trader buys cryptocurrency at $50 and sets a stop loss of $40 - he insures all of his $50. Used for short periods of time; in a stable market, when the risk of sudden sharp drops and subsequent jumps is minimal; in a falling market, when a sharp rise in price is unlikely.
- Partial Stop Loss
Set on a portion of the transaction amount. For example, a trader buys cryptocurrency at $50, but sets a stop loss only at half - at $25. The remaining $25 is not insured. It would seem unreasonable, but... It may happen that the cryptocurrency rate drops sharply, forcing the stop loss to be triggered and the position to be closed at an unfavorable, although acceptable for the trader, price. Immediately after this, the rate may also jump sharply, soaring from a stop loss price of $40 to all of $70. The trader ends up losing money and missing out on potential profits due to a random, albeit severe, decline. If the stop loss works only on half the amount, then the trader’s losses will be half as much. Such a stop loss is used in very volatile, unpredictable markets, as well as during flats or strong fluctuations, when the price can fall and rise with equal probability.
Disadvantages of Using Stop Loss in Cryptocurrency Trading
Often, a correctly used stop loss not only protects the trader’s funds, but also ensures profit. At the same time, if used incorrectly, it can lead to losses.
When the market is unstable, stop losses are dangerous. This danger is especially evident in the crypto market, which tends to fluctuate very strongly and can break through even the most minimal stop loss, and then, as if nothing had happened, rise even higher. There are many precedents.
For the same reason, too low stop loss prices are dangerous in the crypto market. Let's say a trader buys a cryptocurrency at $50 and sets a stop loss of $40. If market fluctuations break his stop loss, he only loses $10. If he sets a stop loss of not $40, but $25, then in the event of strong market fluctuations he will already lose $25.
But also Stop losses that are too high are dangerous because they can be triggered too often. For example, if a trader loses $10, then opens a position again and sets the same stop loss, the market will still fluctuate - and the trader will lose another $10. This often happens even in a growing, simply fluctuating market.
It would seem that it is enough not to trade with a stop loss during strong market fluctuations, but there are always risks.
In a falling market, for example, a person may not be found in time to accept a stop loss order..
For example, the market falls very sharply and strongly, the price changes literally every minute. If the stop loss is triggered at a certain level and the deal is not concluded in the same minute, after two minutes the set stop loss price may no longer be relevant and no one will simply take such a deal.
Accordingly, in this situation, a stop loss is useless for a trader. True, there are usually those willing to make a deal, and this risk is present mainly on small exchanges or when trading unpopular cryptocurrencies.
In a rising market, a stop loss, especially a trailing one, can prevent a trader from making maximum profit.
For example, a trader buys a cryptocurrency at $50, and the cryptocurrency reaches $70, the stop loss reaches $60. Then a correction occurs - and the stop loss is triggered at $60, although the currency is clearly and persistently growing and after ten minutes it reaches $80.The trader could have made $30 in profit, but in the end he only makes $10.
Of course, he can immediately open a new position for $60. But, firstly, it is unlikely that he will react so quickly if the market is rapidly growing - most likely, he will open a position at $62-65. Secondly, there are also exchange commissions, and every extra transaction is a minus commission.
Is it worth using withtop loss in cryptocurrency trading?
Some traders believe that in the crypto market, for the reasons mentioned above, using stop loss is fraught, and that it is better to track all fluctuations yourself and place all orders manually. Others, on the contrary, believe that it is impossible to do without stop losses in the crypto market due to the same excessive fluctuations.
Although in some cases stop orders are triggered in vain and bring losses, in other cases they protect the trader from significant losses. In a rapidly falling market, a trader often fails to manually place an order in time, while the program does this and finds a buyer in an instant. The moments count down.
Both of these opinions have the right to life. Undoubtedly, The mistake many traders make is that they rely too much on stop losses. Even in more stable markets this is dangerous, and in a fluctuating crypto market, setting a stop loss and going about your business is an even more unwise tactic.
But fast automation (much faster than a trader) in the crypto market can help a lot. Therefore, it makes sense to combine both opinions into one and use a stop loss - but carefully in accordance with experience.
So, Beginners are guilty of excessive use of stop losses, and this mainly leads to continuous losses. Therefore, new traders are usually advised to minimize the use of stop losses and trade manually as much as possible. This is the only way to track when automation can help at the expense of speed, and when a person’s conscious reasoning is more valuable than speed.
Experienced crypto traders usually develop their own stop loss strategies.
For example, in one situation only partial ones are used, in another - complete ones. In the market of one cryptocurrency they do not see the danger in moving ones, while in the market of another they prefer to hedge their bets with the help of a fixed one, but do not particularly count on it. And this use of stop losses is justified and useful.
Stop loss is a simple tool, but here it’s like with any other tool: a fire can be started even with a simple iron, if you don’t know how to use it. The ability to use the tool gives additional advantages, allows you to achieve better results - and stop loss entirely falls under this simple model.