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Stop-loss: the lifeline of every trader


Suresh Sardar
Suresh Sardar

Experienced analyst of financial markets, Forex and cryptocurrencies.

#Bitcoin

Stop-loss (SL) is one of the most important concepts in the Forex market. Every trader has the opportunity to benefit from this trading tool. It’s considered the last frontier that can protect a trader from losses. Stop-loss is a pending order set by the trader. It’s a trader’s instruction to the broker to close an open trade if the price goes in the wrong direction. Stop-loss pending order allows a trader to hedge against force-majeure and unexpected price fluctuations, which are abundant in the market.

By the way, stop-loss also has a brother – Take-profit, which is completely the opposite of a stop-loss. This type of limit orders locks in profit as soon as the price reaches the specified level. Take-profit allows a trader to secure his profit and avoid losing money if the price suddenly starts a correction and heads in the opposite direction.

Where to set your Stop-loss?

Stop-loss can be considered as a point of no return. When the price reaches your stop-loss level, it means that you realize that your predictions were definitely wrong and you need to close the order. Professional traders find these points pretty quickly. Typically, they place a limit order past a specific level or price point. Beginners don’t know how to act so quickly and efficiently. It’s for them to predict which price point indicates a wrong decision, constant doubts have a significant impact on the trading result.

For example, if you close your trades at a profit, gaining 30 to 70 pips, then you should place your stop-loss order at a distance of 50 pips from the opening price.

Even experienced traders are not immune to mistakes. Yes, sometimes they also set stop losses incorrectly. But usually, they just set a limit order at 40 pips. It allows them to prevent losses on the one hand and to save their nerves on the other. Can’t pinpoint your stop-loss? Then simply put it at a 40 pips distance from the opening price, this will limit your losses.

What are the advantages of a Stop-loss order?

One of the advantages is that you don’t have to pay for setting the stop-loss. The standard commission must be paid only after the price reaches the predefined stop-loss level. So, a stop-loss can be thought of as free insurance. Another very significant advantage of a stop loss is that it frees the decision-making process from all emotions that can interfere with trading.

Very often, the trader hopes that the price will eventually go in the right direction and gives the position another chance, which in most cases results in greater losses. Stop-loss can limit such losses. Stop-loss orders allow you to stay on the right track and keep your mind unburdened by emotions.

At the same time, it is important to understand that a stop-loss cannot guarantee 100% income or trading success. By setting a limit order, a trader doesn’t secure his profit. He still needs to analyze the market and stick to his trading strategy. Otherwise, you will lose as much money as you would lose without setting a stop loss, the only difference is that this process will be slower.

Can you trade Forex without setting Stop-loss orders?

In theory, yes. It is possible. But in this case, both trading and emotional risks increase. There are professional traders, who successfully trade without limit orders, but they have many years of experience behind them. If you have no experience, and if you have been trading for less than a year, then it is important to always place stop-loss orders.

In addition, if the stop-loss is calculated correctly and the trade goes in your favor, your stop-loss can move accordingly, with the price. But it is important to remember that you shouldn’t move stop-loss further when your trade is already at a loss. This is a bad idea, and such trading behavior can wipe out your deposit in no time.

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Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 77.6% 42 $57 397.14 5.51% -0.13% $1 084 001 374 692 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 78.8% 32 $4 325.04 6.69% 3.38% $512 656 495 446 ETH 7 days price change
3 Binance Coin (BNB) BNB Binance Coin predictions 73.6% 53 $609.29 4.33% 7.07% $101 630 227 689 BNB 7 days price change
4 Tether (USDT) USDT Tether predictions 96% 1 $1.000997 0.02% -0.01% $73 194 134 956 USDT 7 days price change
5 Solana (SOL) SOL Solana predictions 69.2% 65 $203.84 7.44% -8.23% $61 976 513 439 SOL 7 days price change
6 Cardano (ADA) ADA Cardano predictions 68.8% 60 $1.59 5.99% -11.72% $52 852 892 795 ADA 7 days price change
7 XRP (XRP) XRP XRP predictions 74.8% 51 $0.987767 7.45% -5.41% $46 582 102 093 XRP 7 days price change
8 USD Coin (USDC) USDC USD Coin predictions 91.2% 2 $0.998878 -0.13% -0.10% $38 347 542 030 USDC 7 days price change
9 Polkadot (DOT) DOT Polkadot predictions 62.4% 75 $36.25 8.95% -9.51% $35 798 276 399 DOT 7 days price change
10 Dogecoin (DOGE) DOGE Dogecoin predictions 61.6% 74 $0.205694 2.60% -7.52% $27 214 125 290 DOGE 7 days price change
11 Avalanche (AVAX) AVAX Avalanche predictions 62% 75 $112.35 3.84% -16.51% $25 147 340 195 AVAX 7 days price change
12 SHIBA INU (SHIB) SHIB SHIBA INU predictions 63.2% 77 $0.000039 3.61% -9.86% $21 537 353 661 SHIB 7 days price change
13 Crypto.com Chain (CRO) CRO Crypto.com Chain predictions 57.2% 90 $0.766272 1.87% 10.94% $19 358 331 922 CRO 7 days price change
14 Terra (LUNA) LUNA Terra predictions 62.8% 72 $49.02 8.15% 18.38% $19 258 363 664 LUNA 7 days price change
15 Wrapped Bitcoin (WBTC) WBTC Wrapped Bitcoin predictions 78% 46 $56 525.74 5.34% -1.06% $14 327 926 572 WBTC 7 days price change

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