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Buy Stop, Sell Stop, Buy Limit, Sell Limit, Trailing Stop Loss, Margin Call

1. Buy Stop

A buy stop is a purchase made by a trader when the price of a cryptocurrency breaks through a resistance level. This is done by traders in order to benefit from the bullish moment that occurs in cryptocurrency by waiting for confirmation first.

For example, in the BTC/USDT chart below, the BTC price at that time was 33872.89 USDT with the resistance level at 34706.41. When the BTC price moves up through the resistance level, traders start making purchases before the BTC price climbs higher, by doing this traders can get BTC at the most ideal price when the bullish phase has been confirmed.

2. Sell Stop

Sell ​​stop is something that traders do to sell their cryptocurrency at a price that is below the current price. This is done so that traders do not experience more losses if the direction of the trend has reversed in a very short time.

The chart below shows how a sell stop is executed. Currently the price of BTC is at 57957.44 USDT with the support level at 53358.56 USDT. When the BTC price continues to decline after a trend reversal and breaks the support level, that's when we make a sell stop. This is so that we traders do not experience a bigger loss.

3. Buy Limit

The most ideal purchase of cryptocurrency is when the price has touched the lowest price so that we can sell it at any price. This is what is done on the buy limit, the buy limit is done when the cryptocurrency hits the support level which is the lowest price level in a period of time.

For example, the chart below shows the price of BTC at 36244.36 USDT and the specified support level is 34833.25. when the BTC price has touched the support level, the trader will place a buy order with the belief that the BTC price has entered its lowest price level.

4. Sell Limit

Sell limit is the sale of cryptocurrency that has broken through its resistance level, by doing this traders will benefit at the current highest level and can avoid losses that occur if the cryptocurrency price drops suddenly.

For example in the chart below it is shown that at this time the price of BTC is at 59035.42 USDT and traders have already bought BTC at the current price, then the BTC price rose until it touched the resistance level at 61529.50 USDT and at this time the trades will sell BTC. he has because the BTC price has touched the resistance level which is considered the highest price level.

5. Trailing Stop

A trailing stop order is an action taken by traders to take profits and at the same time protect them from losses. Traders will place orders that they have previously analyzed and the price has been determined as a benchmark, then they will also determine the percentage difference from the market price when the market is volatile.

The goal of this type of trading is to increase the trader's profit gradually. With this type of trading, it will allow traders to get maximum profits and at the same time they will get security in the event of a sudden decrease in cryptocurrency prices in a pre-calculated percentage.

6. Margin Call

Margin Call is a situation where traders will get a call made by a broker to investors under certain conditions. The condition referred to here is a condition where the trader has suffered a considerable loss by using all the money he has invested. By making this margin call, traders will be assisted by brikers who are more experienced in order to get back the mpdal that has been invested at the beginning.

So when a trader registers an account with a broker, he will be asked to pay a certain amount of money. The money will be used by the broker to double it so that he too can participate in making trades.
The amount deposited by this trader will allow him to have a minimum amount of money or initial capital which is referred to as Margin.

Risk Management

In trading cryptocurrencies we must remember that there is one thing that we must always pay attention to and very important, namely risk management. Risk management is a series of precautions taken by traders to get the highest profit and minimize losses. It must be recognized that although we all strive to profit from the trades we make, we must also pay attention to taking an action that can protect the assets we trade.

Risk management is a situation where we start to think about how we can control emotions, thoughts and other negative things when we will make decisions in trading, by doing this will increase our confidence in trading so we will not panic and will get maximum profit.

There are various things we can do in risk management, including:

1. Risk and Rewards Ratio

Every reward that we will get when we trade cryptocurrency, then it will always be accompanied by the risk of loss. The Risk and Reward Ratio is a strategy that consists of taking the risk of the lease in order to get a bigger profit. Usually the risk ratio that is often used by many people is 1:1, 1:2, 1:3, and 1:4.

Each type of risk has its own uniqueness, to use these ratios must be coupled with continuous experience and trading, everyone can increase their risk-reward ratio to a higher level if they already have enough experience, for example for beginners usually will use the smallest ratio first, namely 1:1, which means the profits they get will have the same ratio if they experience losses. Once they are reliable enough then they can raise their risk and reward ratio to the next level such as 1:2, 1:3, and 1:4 which has a higher rate of return than the first ratio.

2. Stoploss and Take Profit Level

Stop loss and take profit are a level or point determined by the trader in making trading decisions. By setting the Stoploss point, traders are sure that they will exit the cryptocurrency at a level where the cryptocurrency will experience a continuous decline in price if it hits that level. Likewise, take profit levels, if traders have set a take profit level, they are sure that this level is the most appropriate level for them to make sales and can take advantage of the results of the trades they make.

These two things must complement each other so that they can be applied optimally, every trader must always prepare stop loss and take profit levels when entering a cryptocurrency trade. The second level of these things is often mentioned together with their respective ratios, this has been discussed in the previous discussion.

For an example of using Stop Loss, Take Profit Level and Risk Reward Ratio we will use the BTC/USDT chart with a 4 hour timeframe. To trade this time I will use an indicator called the Moving Average (MA), I use 2 MA lines to see the movement of the average BTC price quickly and slowly at the same time, the length of the indicator I chose is MA 100 and MA 200.

Before you start trading, you must first see if the trend is entering a bullish or bearish phase. In the graphic above, we can see that there is a cross between the 2 MA lines where the MA100 line is above the MA200 line, moments like this are often called the Golden Cross, which means the trend is entering a Bullish phase.

After the Bullish phase has been confirmed, we will take a buying action in order to take advantage of this bullish trend. The details of the trading I did are as follows:

• Entry price: 45801.87 USDT
• Take Profit Level: 47798.88 USDT
• Stop Loss Level: 43812.19 USDT

The Stop loss level that I set is based on that I will sell if the BTC candlestick touches the MA100 line. From these provisions, we can calculate how much profit and loss ratio I will get

• Profit: 47798.88 - 45801.87 = 1997.01 USDT
• Loss: 45801.87 - 43812.19 = 1997.01 USDT
• Risk and Reward Ratio: 1997.01 / 1997.01 = 1/1

With this calculation, we can see that the risk and reward ratio that I use is 1:1, which means the amount of loss I will experience is the same as the profit I will get.

3. Portfolio Management

Portfolio management is no less important than the risk management I mentioned earlier. As we know portfolio is a list of cryptocurrency assets that we currently have. If we look at beginners, they will often buy cryptocurrency assets with only one type, for example, they buy all their capital in Bitcoin just because they are famous.

This is very wrong, because they put their money in only one type of cryptocurrency, if one day the Bitcoin price goes deep enough then they will experience a huge loss. However, if they spread their capital to several types of cryptocurrency assets, then if there is a decrease in the price of Bitcoin, they still have a chance to survive on other cryptocurrencies that do not experience the decline.

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Conclusion

All trading activities that we do will never be free from mistakes that will result in us experiencing losses. To reduce this we must really understand how to manage financial risk that we can tolerate. Because this has been felt by many traders around the world, where they cannot manage risk when trading so they often experience huge losses and finally they give up trading.

With risk management like this, it will make us more careful in trading on cryptocurrencies and we can also control our emotions more so that we don't get carried away by negative emotions when trading.