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The Crypto Price Has Been Falling, Why Not Learn How to Use The Stop-loss Strategy ?!
26 May 16:52
Preface:
The Stop-loss strategy is a commonly used technique in trading, which can avoid investors' hesitation or fluke psychology caused by large losses in the case of frequent price fluctuations, reduce investment risks for investors, and reduce capital losses to seize opportunities in later markets.
What Is Stop-loss?
The high return of virtual currency attracts many users to invest, but at the same time it is also accompanied by high risk. The sharp decline of the LUNA coin has made many investors lose a lot, but there are also many investors who stop losses in the strategy, which greatly reduces the amount of loss.
Stop loss is an important part of the strategy, which refers to the timely liquidation of a portfolio when the loss reaches a certain proportion, so as not to form a larger loss.
Why Should We Use the Stop Loss?
It is not simply profit you make but fund utilization rate that plays an important role in determining profitability. Many investors have a certain evasive mentality of stop loss, who are unwilling to stop losses at the beginning of losses. When more and more losses happen, they can’t do anything but stop losses. Then they will comfort themselves with the excuse that they fail to grasp the market situation.
In the high-risk crypto market, the first thing you should do is survive. Only when you have enough assets, should one consider further development. The key role of using stop loss is to enable investors to cut out positions in time to avoid larger losses. By limiting losses to a smaller range, investors can better survive and grasp the next market to make a profit.
How To Stop Loss?
At present, there are two ways to stop loss on Gate.io, one is to set a fixed stop-loss price, when the coin price falls below the stop-loss price, stop-loss will be triggered and all coins will be sold; the other is to set the stop-loss ratio, when the loss ratio of investment amount > = automatic stop-loss ratio, the strategy will be terminated. You can set stop-loss when creating different strategies.
How To Make A Strategy stop-loss in Gate.io
<1> Set a fixed stop-loss price
< 2> Set the stop-loss ratio
A simple illustration of setting a stop-loss price
Case 1: Taking the previous closing price of LUNA as an example, suppose I set a fixed stop-loss price, when the Luna price falls below 45, the grid at 40 will be triggered, and the coins will be sold out. Then the actual loss: [(40+40)-(80+60)]/(80+60)=-43%. If the stop-loss is not set, Luna price continues to fall to 0, then the loss is 100%
Case 2: Taking the previous closing price of LUNA as an example, suppose I set a fixed stop-loss ratio, when the price falls to 60, the expected loss: (60-80)/80=25%, when the actual loss ratio >=20%, it will sell automatically, then the actual loss is 25% if choosing to sell all at the price of 60. If the stop loss is not set, the loss is 100%
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