A stop-loss order is an automatic sell order that gets triggered if the price of your crypto falls too far.
Here’s how they work:
- You Pick the Price: You decide the lowest price you’re willing to accept before selling. This is your stop price.
- Set the Order: You tell the exchange: “If the price hits my stop price, sell my crypto immediately!”
- Protection from Disaster: If the market takes a sudden downturn, your stop-loss triggers and limits your losses.
Why This Matters
- Crypto is Volatile: Prices can crash fast. Stop-loss orders help make sure a small loss doesn’t turn into a huge one.
- Emotions Get in the Way: It’s hard to sell when you’re losing. Stop-loss orders make the decision for you, taking emotion out of it.
Important: Stop-Losses Aren’t Perfect
In a really fast crash, you might get a worse price than you expected. But it’s always better than losing everything!
The Big Idea: Think of a stop-loss order like an insurance policy for your crypto investment. It won’t prevent every loss, but it can save you from complete disaster.
