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Manage risk with stop loss orders when margin trading
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A stop loss order automatically executes a market buy or market sell when a specific price is reached. It’s an extremely useful tool for maintaining a predictable level of risk when margin trading.Many crypto traders choose to set stop loss orders 1-2% from the intended direction of their trades. For example, if Bob opens a BTC long at USD6,500, he can set a 1% stop loss order at USD6,435. If the price of BTC moves against Bob to the downside and crosses USD6435, a market sell order will automatically execute locking in a predictable $65 loss for Bob.
Stop loss orders are important in typical unleveraged trading, but they are even more crucial to long-lerm success in margin trading. Why? Because stop loss orders can protect you from being liquidated in a flash crash, which is a common occurrence in crypto.
Liquid’s easy-to-use trading interface supports two kinds of stop orders - “stop” and “trailing stop”. Normal stop orders allow you to set a trigger price in the denominated currency. A trailing stop allows you to set a percentage-based trigger that follows the price of an asset up and down.
Login to Liquid today to check out how to add stop loss orders to your trading strategy.