Trading's main goal is to avoid losses and maximize profits, so why not take full advantage of tools like stop loss? We need to stop being greedy and careless.
Just look at what happened recently, over nine billion dollars got wiped out in an instant due to Trump's news about increasing tariffs on China. That shockwave made the big players move their assets, and the market just kept dropping.
Check out the chart, you can see the price plummeted from $22,000 to $101,000. Some exchanges even reported a dip to $102,000. If most traders had just set stop loss limits in place, many wouldn't have been hit as hard. When the price hits that limit, it automatically opts them out instead of risking liquidation.
It was sad to see that a trader even took his life seeing that he ose millions of dollars from this liquidation, and someone else seeking for advice after losing $40k, I also advised them to try and be using stop lose limit on their trade but then I later realized that day traders, scalpers and swing traders are the kinds of traders that mostly work with stop lose while position traders most likely don't use it like, and there was no way they expected that price would have just crashed over night, some of these traders just woke up to the news, or returned from their daily business only to check their phone and see the loss.
Your profit is the losses of someone or some people while your losses is the profit of someone or some people. The profit of some people in trading are the losses of some people.
Risk traders are the ones that are using stop loss and they are still the one that think they are professionals but losing. You will see a swing trader with 1.5x, 2 but not more than 3x leverage to be patient and not set stop loss, but you will see scalpers and day traders use high leverage, set stop loss but still be losing.
The liquidation later increased above $20 billion.
I have used stop loss before, as it has advantages, it has disadvantages also. There is nothing better than low risk traders that trade bitcoin with a very low leverage. Some people may not even use up to 1x leverage.
I see trading as a competition, you are trying to outsmart intelligent people that are ready to make profit off your mistakes at anytime ...The moment you lose they make profit..The importance of making use of stop loss cannot be overemphasized, a lot of traders think it's not necessary because they are always out to make profit no matter what. It is sad that someone ended his life cause he made mistakes
Really, so why do they usually make the statement that [call any amount] billion dollars has been cleared off from the market as if the money went into a different place if not still in that market. Makes me to think that maybe the money was claimed by a specific group nof people or maybe collected by the broker or exchange.
The news about the tariff is just fuel. The price last week was supposed to be strongly bearish, but because of the news about cut rates, it stuck to consolidation between $120k and $123k; it's struggling to pump or drop. I do not see big movement until Friday; the crash happens due to tariff news.
The reason why I said it's supposed to be bearish is because the strong resistance under $126k is connected to 2021.
If you check the chart in weekly time frame, the upper channel of the flag or trend was hit last Monday, and the next price action would be bearish because that is the 3rd attempt since August, and it is another rejection. Without the news, you would think that this is a strong bearish.
So the news about the tariff is fuel for other investors to go sell since the price was rejected 3 times.
This sudden crash will surely hit your liquidation if you don't use stop-loss. That is why we do need this feature to cut losses on unexpected events like this.
A lot of persons who are traders underestimate the importance of Stop loss in trading and some of the reasons why they do this are
(a) They become too overconfident in their analysis and greedy.
(b) The fear of a market retracement taking them out, so instead of setting a wide stop loss, they ignore it completely.
(c) No proper knowledge of risk management.
(d) Poor discipline in trading.
What other reasons can you identify?
Exactly this is what trading itself is all about, it is actually a space of demand and supply and therefore those buying will definitely not want people to sell and there is where most of the volatility case from because we all know that a news can influence a position change and people go against their position just like what we saw yesterday it is because of uncertainty that one needs to safeguard themselves before proceeding to think of the profit.
Most traders intentionally do not like to add stop loss because of the fear that if the market is changing direction it will take them out of the market and might later go back into their direction as such people fall for this trick and do no like to add this stop loss, but once again event yesterday has again proven that market is never predictable and if we must trade it should be that we first of all secure our capital first before even going after the profits, most people who got liquidated yesterday were definitely those who do not like to add stop loss
Stop loss is meant to help you get out of a losing trade. When the market takes out your stop, it likely means that your setup was wrong or it was manipulated. A good trader will not allow such trade to take him into a losing streak.
Having no stops on a trade is definitely risky. We know how the market can be liquidated anytime, so it's better to play safe.
The only problem with stop loss at time like this when things happened so fast is that your transaction gonna be settled way below the stop loss mark that you set up essentially making you loss much more than you can expect.
But it's definitely better than getting liquidated to oblivion.
If you want saver method maybe don't use cross margin account, or simply trade spot only because leverage is poison if you don't take advantage properly.
Stop Loss is the thing that we should use in trading to anticipate drops like this. We can still make a profit in the drops because we close our trade before the price drops. While the price is down, we can enjoy our profit without thinking much about where the price moves.
But unfortunately, many people lose this and not use Stop Loss. That makes them lose their money because mostly, they are not in the market when the drop comes. They are shocked by the bad things that occur and difficult to accept it.
So if you trade, it is better to use the Stop Loss feature and decide when you close your trade. You should leave the market in a profit position and not in a loss position.
Stop loss is one of best weapons for traders in trading and all traders need to use it or any other weapons that are helpful for defending their trading capital in a very volatile market, especially when they are busy or sleeping.
Learn more about stop loss order, that is one of best weapons in trading.
Another weapon for traders is Stop limit order.
Learn what is a Stop limit order?
Learn about difference between a Stop loss and a Stop limit order.
Awesome cryptocurrency trading.
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Stop Loss aims to measure losses so that traders can minimize deep losses. But did you know that when traders set Stop Loss, Market Makers chase the price or position that you set SL because that way Market Makers can profit every day when they see traders hitting the Stop Loss point. The proof is that millions of people have been liquidated, yet Bitcoin price has returned above 110K. For futures traders, this is a catastrophic event that struck them overnight, but spot traders who remain holding their assets still have a chance to recover their capital.
I saw some discussions about a stop-loss issue on one exchange, where it didn't work as intended. I don't know if this is possible, but in any case, futures imply the loss of your entire position, so it's always a big risk, much greater than you can afford when risking your own money. That's why I prefer spot trading only and never keep my coins on an exchange, because if the coins aren't yours, they don't belong to you entirely. If they're under the exchange's control, anything can happen, and you have no control over it.
The Bitcoin is the highest caps in the market and a lot of people thought that it is invulnerable to dips, Bitcoin is still a cryptocurrency and we should not be surprised that it crashes from $122k to $101k. You are right, one of the most simplest, basic tools in trading and yet one of the most powerful is the stop-loss and not all people are taking advantage of this, one reason is they don't think that it will crash and second they're too cocky that they think their setup is perfect not realizing the dangers ahead.
When I studied trading and when I read a lot of tutorials a few years back, all of them are saying one thing. "Determine the stop-loss" it's a partner of the take profit, there's no setup that you will only have a take profit. When there's take-profit there should always a stop loss.
It's sad, but that's how harsh the battlefield of trading can be. Anybody can become a millionaire in just a few months, while somebody out there like the one who took his life can lost millions in an instant.
Unfortunately, the market doesn't care about our emotions. You're sad? Who cares? You're happy? Who cares? Well, I just hope that every single trader that are in the forum today learned something very important with this massive dump that happened a few days ago. Nobody expected this TBH, and those who are safe from liquidation (like me) are just lucky that they didn't enter a position hours before that happened. There are some who lost of course but that's because it hit their stop-loss, but I've seen people online posting their current account where they lost $4M, and there's somebody who lost $5M as well.
And Trump? The one who made it all this, doesn't even care. Heck, he didn't even address what happened with the US market and the crypto market. Always, always put a stop-loss after entering a position. A very important thing to do if you want to be successful in trading.
In such a severe market manipulation like this, even a stop loss order or a stop limit order is not enough to save your trading capital. There were many wrong things like a Cascade effect that makes the market crashing and freefalling like this. I believe that along side of market liquidation to bottom price, there were many stop loss orders and stop limit orders were not triggered properly. Such order failed executions trigger the market falling deeper and deeper with very fast speed until all leveraged orders were completely liquidated.
Binance will be investigated by SEC after this market crash which is very weird.
He knows well about financial market and since his first Presidency in 2016 to 2020, many times he used his mouth, words of mouth and news to dump markets. In this second Presidency, he has just escalated to a new higher level of manipulation.
Was he not aware of the risk in trading and not to use any amount of money he can't afford to lose on trades, for someone like that to lose this huge amount shows he must have been consistent in taking similar risk in trading, like I don't want to believe it that was actually the cause of his death or something else that just happened as a coincidence, because he was found dead in his car.
You've mentioned almost all the most important aspects causing this, maybe this thread will as well serves a reminder to soen by taking risk control measures in applying stop loss in their trades.
Too many traders are a huge risk takers and that's terrible. Of course, without a risk, there is no reward but what traders do is simply insane. It's very sad that that person committed a suicide but why was he playing with the life saving? You are a millionaire, maybe risk lower or say thank you to god and start a business instead of being involved a very risky activity or forget day trading and trade in a very rare circumstances because when you are a millionaire, your 1% profit (which is extremely easy to do) is enough to live a pretty good life for a few months even in a wealthy country.
Stop-Loss is a very important feature in trading and being a lucky doesn't mean that you'll always be lucky, there will come time guys when you'll regret not using a Stop-Loss option.
Some traders get overly optimistic of their strategy and believe that their strategy cant fail them, so they risk all in order to get a bigger profits. They know the importance of stop loss but some dont feel the need to because they have a whole bunch of money to still put into the market when that one got liquidated. For a beginner trader, this is not the best way to trade and for the average and better traders, stop loss is an integral part of what makes you a better trader, limiting your losses and maximizing your wins.
Fundamental principles of the market plays a major role just like the technical part of it too, so stop loss is important in trading and we should stick to always put one no matter how confidence we are of the market going our way. Always embrace losses with a clean heart and not chase them, they are part of the process but by embracing them should also mean you should minimize allowing them all the time as theyre unavoidable.