Methods of How to Set Bitcoin Stop Loss Orders in Bitcoin Trading

Traders using a Bitcoin system must have mathematical calculations that reveal where their stop loss order must be placed.

A trader can also set a stop loss order according to the technical indicators used to set these stop loss orders. Certain technical indicators use mathematical calculations to calculate where the stop loss orders should be set so that to provide an optimal exit point when trading Bitcoin Crypto Currency. These chart indicators can be used as the basis for setting these stop loss orders.

Other online Bitcoin traders also place these stop loss orders according to a pre-determined risk to reward ratio. This method of setting these orders is dependent upon certain mathematical calculations based on BTCUSD chart price movements. For example a ratio of 30,000 points stop-loss can be used by a trader if the trade has the potential to make 90,000 points in profit: this is a risk reward ratio of 3:1. Also, a ratio of 30,000 points or $30 stop loss can be used by a trader if the trade has the potential to make 90,000 points or $90 in profit: this is a risk reward ratio of 3:1

Other traders just use a pre-determined percentage% of their total trading equity balance.

To set a stoploss order it is best to use one of the following methods:

1. Percentage of BTCUSD Trading equity balance

This method is based on the percentage of the account balance that the trader is willing to risk on any one single BTC USD Crypto trade. If a trader is willing to risk 2% of their trading account balance - then the trader determines how far he will set the stop loss order level based on the trade size that he has bought or sold.

Example:

If a trader has a $50,000 account and is willing to risk 2 %

If the trader buys 10 contracts

1 pip = $0.01

Then setting at 2 %

2 % is $ 1,000

1000 /0.01 = 100,000 points

Stop loss = 100,000 points equal to $100

If the trader buys 20 contracts

1 pip = $0.02

Then setting at 2 %

2 % is $ 1,000 dollars

1000 /0.02 = 50,000 points

Stop loss = 50,000 points equal to $50

If the trader buys 40 contracts

1 pip = $0.04

Then setting the stop at 2 %

2 % is $ 1,000 dollars

1000 /0.04 = 25,000 points

Stop loss = 25,000 points equal to $25

2. Setting Stop Loss using Support and Resistance Zones

Another way of setting stop losses is to use supports and resistance zones, on the BTCUSD trading charts.

Given that stop loss orders tend to congregate at key points, when one of these support or resistance levels is touched by the price, other orders are set off, like dominos. Stoploss orders tend to accumulate just above or below the resistance or support zones, respectively.

A resistance or support level should be like a barrier for BTCUSD price movement, this is why they're used to place stop losses, if this barrier is broken then the BTCUSD price movement can move towards the opposite trend direction of original Bitcoin price trend, but if this barriers (support and resistance areas) are not broken, then the BTCUSD price will continue moving in intended direction.

Stop Loss Setting using a Resistance Level

Techniques of Setting Stop Loss Bitcoin Orders in Bitcoin Charts - How Do You Interpret Where to Place a Bitcoin Stop Loss Bitcoin Order?

Placing Stop Loss Orders above the Resistance Level

Stop Loss Setting using a Support Area

Methods of How to Set Stop Loss Bitcoin Orders - Bitcoin Stop Loss Orders Setting

Placing Stop Loss Orders below the Support Area

3. Setting Stop Losses Using Trendlines

A trend line can be used to set stop losses where the stop loss order is set just below the trend line in an upwards trend & above the trend line in a downward trend. As long as the trend line holds then a btc/usd trader will be able to continue making profits while at the same time setting this stop loss order that will lock his profit once the trendline is broken.

Strategies of Setting Bitcoin Stop Loss Orders on BTCUSD Charts Described

Putting the stop loss order below the BTCUSD price trendline

Example of where to set this stoploss order using trend lines in an upward trending Bitcoin Crypto Currency market.

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