Investing in investment products with a high level of volatility, such as crypto assets, does have its difficulties. It is mainly related to the mitigation of potential losses. Many investors can control it, but few have to bear the loss. One way to mitigate losses that you can do is to use a stop-loss technique. If you’re interested in knowing why you should start trading bitcoin click here to learn more.
A stop-loss order is an order made by a broker to buy or sell an investment instrument (either in the form of crypto assets or shares) when the price has reached a specific limit. These orders are designed to limit investors' losses.
For example, an investor purchases Bitcoin and puts a stop-loss order 15% below the buy price. So when the worth descents, this order will be initiated, and Bitcoin will be sold.
Using this technique, of course, can bring various benefits for traders and investors. You can also use it to keep the money invested, prevent the situation from worsening, and make a profit.
After understanding its meaning and use, you have to apply this technique to know when the right time to do it is. Keep in mind that the stop-loss position should not be in a position that is too narrow so as not to be affected by normal market fluctuations.
There are several ways you can opt to determine the proper stop-loss:
1. Trailing Stop-Loss
It is also known as a protective stop. The way it follows is always towards the trends. When the value backs from the movement, the trailing will not follow.
This method is effective for use in trending markets. The reason for that, its progress is parallel with market value. The other feature is that it stops simultaneously with trends.
2. Using Risk Management
Risk management is a way that can help traders to trade with discipline. When you trade diligently, the chances of making a profit will undoubtedly be even more significant.
Some risk management steps you can take include not using all the available funds. No matter how much money you have, use some of it to buy just a few crypto assets and carefully calculate the confidence and opportunities you have.
How Does Bitcoin Work? Get a short explanation in this article!
One of the impacts of advances in digital technology is the emergence of various new forms of investment. These days, among the popular ones, are cryptocurrencies or crypto assets in the form of Bitcoin. In the beginning, the price of this crypto asset is quite promising. It is, of course, that makes people who buy Bitcoin at the beginning of its appearance have many-fold advantages. But, first, it makes others interested in Bitcoin.
Unfortunately, the FOMO phenomenon coupled with a lack of knowledge about Bitcoin can negatively impact. On the other hand, Bitcoin is relatively easy to learn.
Before going into more detail about Bitcoin, first, understand Bitcoin. The inventor is Satoshi Nakamoto, the pseudonymous figure who developed Bitcoin.
Bitcoin is a distributed peer-to-peer network. Bitcoin does not have an intermediary with this peer-to-peer mechanism, so its decentralized network makes all data spread across all servers.
When we talk about Bitcoin, we cannot ignore Blockchain. This technology uses a series of data records managed by computers that do not have an entity. Each data is called a block and is bound using cryptographic principles (chain). From this process, Blockchain is obtained.
The reason lies in its usage of the private key. This system functions like a social media account password or ATM pin. Only the owner knows the keys to retrieve and move Bitcoins even though everyone has information about how many Bitcoins are in the possession and what transactions were made.
In Bitcoin, the term Bitcoin mining is also known. This strategy is one way to get Bitcoin. Usually, mining is not done by one person. Instead, it takes thousands of "miners" using computers connected to the internet. These " miners " tasks are to process every Bitcoin transaction using a calculation and computing system that is not easy.