A Stop loss order is a tool that automatically liquidates your assets once the market price hits a specified benchmark. By doing that, a stop-loss order limits the maximum loss trader suffers. You cut your losses with a stop-loss order and live to fight another day.
However, you need to understand the different stop-loss orders and how they work to use them effectively. There are three types:
• Full Stop Loss Order
This stop-loss order will work best if trading in a stable market that experiences sudden price changes. Whenever you trigger it, it liquidates all your crypto assets preventing a trader from making too many losses.
• Partial Stop Loss Order
This order only liquidates a number of crypto assets a trader specifies. This order is perfect for most crypto markets since they’re usually highly volatile.
• Trailing Stop Loss Order
Unlike the other two stop loss orders, the trailing adjusts depending on the price fluctuations of your crypto assets.
It is up to you to know when to use the orders but never ignore them. They are critical to any sound trading strategy and a fundamental rule to remember in risk management.