Home Community Crypto, Trading, Investing, and Technology Perspective on Stop Losses

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    • #4644
      JustinJustin
      Moderator

      Numerous members have rightfully requested guidance on utilizing stop losses for their crypto investing and particularly with Crypto-ML trade alerts.

      You can see our post https://crypto-ml.com/stop-loss/

      As may be expect, there is no single answer to how you should set stop losses. But hopefully you’ll find some guidance. You’ll also see an analysis of pairing stop losses with Crypto-ML alerts.

      The timing is notable because we just saw the “short” and “long” signals battle it out for BTC.

      It seemed they both had the $9K level as a key point. Despite going into a heavy loss, the short signal held on, seemingly committed to the idea that BTC would bounce heavily off of $9K. Unfortunately for the short, the bounce did not occur. Taking short trades during a bull market comes at considerable risk but the loss was still unacceptable.

      Now that $9K has been breached and held, we have the BTC buy active. It will be very interesting to see where this trade goes, but no doubt this is a pivotal price point.

      What do you all think?

    • #4652
      Avatarmaiconerd
      Participant

      I’ve read the post and I’m currently using only the signals to open and close positions. So far they have worked very well. Of course neither we human beings nor any machine learning program will ever be able to catch the absolute bottom or the absolute top for any trade, but that’s the thing about risk management, most of the time it’s better to close a position too early instead of closing it too late at a loss.

      Stop losses are necessary when you are trading based on technical analysis, but as you mentioned on the post the ML model uses much more than that to determine entry and exit points, so in my opinion I’ll keep leaving the SL/TP to it.

      Thanks for the post anyway!

    • #5310
      Avatarmatthew55
      Participant

      Hello,
      I would like to ask for your help about how to handle stop losses in Coinbase Pro (regardless of using the Auto Trade function)…

      For my understanding the best (only?) way to set a Stop Loss order on such a platform is to create a Stop order AND include a Limit price, as explained here: https://etherminingbot.com/stop-loss-order-gdax/ (hope it’s ok to link an external website)

      Can you let me know if that’s all we can do or if there’re better solutions?

      Thank you again, Matteo

      • #5314
        JustinJustin
        Moderator

        That article you linked is actually pretty good (and better than Coinbase’s own description).

        When you set a Stop, you must set the Stop Price. This means if the price drops below that level, Coinbase will try to sell your position.

        Let’s say you buy at $100 and set your stop at $90.

        If the market is moving down really quickly, it could potentially go below $90 before your order can be completed. So you could potentially end up have your order filled at $80 instead of $90.

        To protect against going too far down, you can also enter a Limit Price. The Limit Price would always be lower than your Stop Price.

        The Limit is what you won’t sell below.

        Let’s now say you buy at $100, set your stop at $90, and your limit at $85.

        The market drops FAST.

        In this case it gets to $80 before Coinbase can sell your position. Since it’s below your limit, it won’t sell and you’ll still have your position.

        Now you’ll have to decide what to do. The market could bounce back. Or it could continue dropping and your unrealized loss would continue to worsen.

        Does that help?

        Here’s a pretty good description too: That article you linked is actually pretty good (and better than Coinbase’s own description).

        When you set a Stop, you must set the Stop Price. This means if the price drops below that level, Coinbase will try to sell your position.

        Let’s say you buy at $100 and set your stop at $90.

        If the market is moving down really quickly, it could potentially go below $90 before your order can be completed. So you could potentially end up have your order filled at $80 instead of $90.

        To protect against going too far down, you can also enter a Limit Price. The Limit Price would always be lower than your Stop Price.

        The Limit is what you won’t sell below.

        Let’s now say you buy at $100, set your stop at $90, and your limit at $85.

        The market drops FAST.

        In this case it gets to $80 before Coinbase can sell your position. Since it’s below your limit, it won’t sell and you’ll still have your position.

        Now you’ll have to decide what to do. The market could bounce back. Or it could continue dropping and your unrealized loss would continue to worsen.

        Does that help?

        Here’s a pretty good description too: https://www.reddit.com/r/BitcoinMarkets/comments/bnptw3/question_about_stoplimit_price_coinbase_pro/

        • #5318
          Avatarmatthew55
          Participant

          Hello Justin, thank you for the explanation even though I already knew how stop losses (and stop limit orders) worked 🙂

          What I would like to know is if in your opinion there’re better platforms out there able to let the user set proper/real Stop Losses, without the uncertainty due to the “hybrid” solution proposed by Coinbase Pro

          Thank you again

    • #5582
      JustinJustin
      Moderator

      Yes, I’d prefer if they had an order entry option that was closer to traditional exchanges where you can enter the limit order, stop, and target all in one.

      I’d be open to hearing from others here what their experience is on other exchanges.

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