Stop Loss Strategy
Automatic loss limiting — trailing stop, hard stop, mental stop.
Stop loss is an automatic order closing a position when price reaches a specified level — basic risk management.
Stop loss types:
1. Hard Stop Loss • Fixed level below which you're not willing to go • Example: bought BTC at $30k, stop at $27k (-10%) • Simple, but can be "stopped out" on volatility
2. Trailing Stop Loss • Follows price up, but doesn't follow down • Example: 10% trailing stop • BTC at $30k → stop at $27k • BTC rises to $35k → stop moved to $31.5k • Locks in profit as price rises
3. Time-based stop • "If nothing has happened in X days, I exit" • Useful for swing traders
4. Mental stop • No automatic order • You decide yourself to exit • Dangerous — emotions often interfere with execution
Where to place stop loss:
Position size calculation:
Beginner mistake: