Did you know most of the traders make money by determining the best timing? But how is this strategy profitable? It is because they are predicting the best price to buy and sell an asset. In the trading world, especially in the crypto world, you timing to enter and exit is extremely important. Profitable trading is based on how you can adjust your take-profit and stop-loss, and it is the only requirement for profitable trading.
Why it is important
The take profit and stop loss are the points that are set by traders in advance. Even before executing any order, traders first determine how they can enter the market and when to leave. No experienced trader is involved in emotional trading. Profitable traders always avoid risk and save their principal.
Stop loss is the key function in trading, and it protects capital and profit.
Take profit is also the key concept but is used to exit from trading when a specific price range is reached.
Methods for stop loss
- Percentage stop loss:
This stop loss is always used in situations when you will consider how much money you are willing to risk. This will be based on the total capital and investment amount. According to expert traders, your risk threshold must not exceed 2%. Support and resistance levels give you the closest range where you will fix this type of stop loss. When the market reached these areas, they always entered and left the market.
2. Volatility stop loss
This type of stop loss is used when you are investing in those assets that are significantly volatile. By understanding asset volatility, you can determine the best price range for a stop loss. Most importantly, when setting these stop losses, you do not have to wait until the predetermined price. You can end the transaction at any time, and this way you can avoid emotional trading completely.
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