The Best Trailing Stop Strategies to Ride the Crypto Trading Trend In 2022

by Trailing Crypto cryptocurrency experts

So, you have heard about cryptocurrency millionaires and want to try your hands on it? Are you planning to invest in cryptocurrencies? Originally, cryptocurrency was intended to become a global payment mode, but currently, people are investing in cryptocurrency to earn profits.

But you know, this is not as easy as it seems. A lot of people are losing their money due to a lack of understanding. When prices increase, investors are attracted to the crypto industry and when the market crashes, they end up with heavy losses. But, you know there are certain strategies which expert traders use to earn good profits from cryptocurrencies.

Choosing the best crypto trading terminal like TrailingCrypto helps its traders to place successful trading strategies. The best trading platform gives you the best tools which you need to earn good profits. Trailing stop orders, trailing stop buy, trailing limit buy and sell, and the ability to execute many strategies across trading pairs in parallel.

No matter what is your trading method, strategy, or style, you can make it possible with automated trading.

To become a successful crypto trader, one of the most important strategies which you can apply is to start placing stop losses or the trailing Stop Sell Order even in the trending market. So how can one use stop-loss smartly?

Trailing Stop

Trailing Stops is one of the most important strategies that allow its traders to maintain a stop-loss order at a precise percentage above or below the market price. Trailing stop technique is used to buy or sell securities if they move in unfavorable direction. One can set these orders at a specific amount or percentage away from the asset’s current market price.

The main difference between stop loss and trailing stop strategy is that trailing stop moves as the price of asset moves and the trailing stop loss strategy should be used only in the trending market.

Let’s understand this with an example:

Suppose a crypto trader is holding a long position of BTCUSD contracts at $10,000 and a trailing distance has been set at $500.

Once the last traded price moves up, the Trailing Stop will move in the upward direction and will maintain the trailing distance of $500.

For example,

If the last traded price moves up to $10,600, the Trailing Stop Price will automatically be adjusted to $10,100 and locks in the profit.

This means that the Stop Loss will be activated only if the price drops by $500 from the highest price reached. However, if the price never went up the Trailing Stop will be triggered a $9,500 just like a normal Stop Loss.

Trailing stops provide the most effective and efficient ways to manage the trader’s risks. And, they use these order types as a part of their exit strategy.

If a trailing stop loss of 10% is added to a long position, the sell order will be executed if the price drops 10% from the peak price after the purchase.

So, a trailing stop order can limit the losses of a trader and enables him to protect a position without any risk of taking profits too early. The trailing stop order only moves in one direction.

For a trailing stop to sell, placed on a long position, it will only move up. And, for trailing stop to buy, placed on a short position, it will only move down.

Trailing Stop Buy vs. Trailing Stop Sell

Trailing stop sell order is placed at a fixed amount below the current market price of the crypto asset. As the price of cryptocurrency increases, the order activation price is adjusted automatically so that it is never more than a specified value or trail away from the market price. If the market falls, the activation price doesn’t adjust.

On the other side, Trailing stop buy is placed at a fixed amount above the current market price.  As the price of the crypto asset falls, the order activation price is adjusted so that it is never more than a specified value or trail from the market price. If the price increases, the activation price doesn’t adjust. And, the asset will be purchased at the best price.

Trailing Stop Limit Order

Another popular strategy used by crypto traders to limit their losses is setting a trailing stop limit order. This order type activates a limit order to buy or sell the cryptocurrency once the market price reaches the specified trail amount which is just below the peak price of the crypto asset to sell, and above the lowest price to sell the asset.

Trailing stop limit order places a limit on your loss so that you don’t sell too low.

For example, say you have LTC trading at $10 and you put a stop loss at $9 and a stop limit at $8.50. If the crypto asset suddenly crashes to $7, making your sell order at $7, so, it wouldn’t execute the stop loss because it is below your limit of $8.50. So the stop limit protects against fast price declines.

Trailing Limit Sell vs. Trailing Limit Buy

Usually, the price at which the trailing stop limit order is executed continuously reset if you enter trailing limit sell order and the bid price increases. 

Similarly, for the trailing limit order to buy, the price at which the order is executed will be reset to a lower value continuously.

Conclusion

Make sure to research for the best crypto trading terminal and their services. The best crypto trading platforms provide the best strategies and automated crypto trading for beginners to trade smartly.

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Created on Nov 24th 2021 01:12. Viewed 362 times.

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