What is the best crypto exchange to ensure BTC stop-losses?
A stop-loss is essentially a probability tool used to manage risk while crypto trading. It is placed as a counter-order to a buyer’s position in the crypto market and is created to limit the crypto-currency owner from incurring large losses.
In theory, if a user buys into the crypto market, a stop-loss will be placed below the buying point. At any time, if the market drops below the buying point, a stop-loss works to ensure that the buyer incurs a smaller loss than he/she could potentially have sustained. Therefore, the buyer’s trade will be terminated at a relatively short loss.
The most essential tool that a buyer needs while trading in the crypto market is the stop-loss and most buyers could easily end up broke if it wasn’t for this tool. A common problem that many people tend to face is not knowing where to place their stop-loss. Mostly, beginners tend to place their stop-loss just below their buying point, in an attempt to limit their loss as much as possible.
However, doing so can cause the trade to be terminated quite quickly, as there tends to be significant rise and fall in the trade market. Placing the stop-loss only a little way below the buying point would cause all trades to be terminated as soon as there is a minor drop in the market. This is a bad idea. The stop-loss should never be placed so close to the buying point.
Therefore, it would be deemed smarter to position the stop-loss at a point below which the loss incurred would be the highest possible loss that the buyer can sustain. It is important to note that even this loss is comparatively lesser than what the buyer would have originally been exposed to, had the stop-loss not been placed.
All trades that are made in the crypto world should ideally have a stop-loss and most of them should be placed to reap maximum profit. The reason why placing a stop-loss under each trade is so vital is that when trading, even if the trade is terminated after the stop-loss is hit, a new buy area would not be that difficult to find. However, it would be highly unfortunate for one to be caught in the midst of a market freefall and to lose all finances.
A popular strategy in the trading world is for buyers to place their entry where they placed their stop-loss. While some may be speculative of this technique, experts swear by it. The science behind it is very simple i.e. the market is bound to rise even after the original stop-loss is hit, so the buyer could enter the trade again through the new entry point.
CoinMarketCap’s data shows that some of the most popular crypto exchanges in the world include EtherFlyer, MXC, BKEX, Coinsbit, Hotbit, BitForex, etc. These platforms have the largest databases of cryptocurrencies, while more cryptocurrencies are being added continuously as well.
However, while these exchanges have been performing extremely well since crypto-currency became a huge hit globally, they are yet to introduce stop-loss functionality. It is uncertain as to why these exchanges do not provide this function, since it is possible to place advanced orders relating to many other trading techniques. One exchange that is popularly known to have had stop-loss functionality is Kraken. However, this function is not offered at Kraken anymore either as of 2017.
Summary: One of the most important tools for a buyer to have while trading is the stop-loss function. This small tool can help limit the losses a buyer has to incur while trading. Without the stop-loss function, most traders could easily lose all their investments.