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RE: Do You Want To Be a Better Trader? - The Use of Stop Loss Orders to Minimise Trading Risk
Another great article @aghunter! There is so much to navigate but I find the world of crypto investing fascinating.
Theoretically - on a bad day for the crypto market could you risk selling everything with stop loss orders?
Yes, this is true. But if you imagine you had bought 1 BTC at $18,000 last month. The market went up a bit to almost $20k and then dropped. So your stop loss would have kicked in at $16,200 and you would have sold your BTC and pocketed the cash. You could now use that money to buy back in at about $9,500. Now you would own 1.6 BTC.
You’ve saved $6,500 that would have been lost if you had just HODL’d, plus if you really like BTC as an investment then you now own more BTC than you started with!
Given recent volatility you would have been forced to sell everything as you say, but the market has fallen by over 50%. The stop loss means you miss most of the drop and you’d be sitting in cash right now and could decide if you wanted to buy back in.
Ahhhh! Now I get it! Makes perfect sense now that I understand! Lol