There are many strategies used to make money on the crypto market. They range from very convoluted to the ultra simple. The overarching concept is always to buy low sell high. Common sense right? Well, it isn’t always that easy. With as fast as the market moves it can be easy to miss a good opportunity for buying or selling. If a coin starts crashing it sucks getting caught not paying attention and selling too late. Enter the stop-limit order. You can use this tool to keep you from missing out and become a profit machine.
First, let's understand the terms stop and limit. The “stop” Is the price that you want the order to be triggered at. The limit is the price the order will be put on the market for. The gap in between the two is to make sure your order gets filled in times of high volatility. There have been plenty of times that I set an order to buy or sell at a certain price only to have that price hurriedly shoot past before my order gets filled. The lower your order is valued the longer you wait. No first come first serve here. Sad day. Stop limit puts an end to that.
So let's go over selling first. Litecoin has been having a good run lately but as we all know dips in the market are as regular as waves in the ocean. Great. Litecoin is at $150 today but where will it be tomorrow? Let’s say you bought 10 Litecoin at $100 and you don’t want to lose all of your profit if it goes down instead of up. Set your STOP at $125. The LIMIT could be set at $123 to make sure your order gets filled. The amount will be the 10 Litecoin you bought. What will happen is as soon as Litecoin drops to $125, an order to sell 10 Litecoin at $123 will be placed. Stop-loss sells are the best way to protect against losing investments
Buying is a little more tricky. Let’s say Litecoin has indeed crashed to $110 from our earlier example. You think it may be done and now is a good time to buy. Play the upswing by setting the STOP to $115 and the LIMIT at $117 . Same as before. If the price raises above $115 then an order for $117 wii be placed.
So how do you use these tools to become a profit machine? If you follow any of the coins you’ll have heard of the terms support and resistance levels. We can use these levels to set our stop-loss buys and sells. These numbers of course aren’t absolute but are pretty spot on usually. That’s why we use stop-loss. Because support/resistance isn’t exact a stop-loss order can allow you to use them as an outline to set your STOP numbers while placing your LIMIT order far enough below or above the STOP to make sure the trend is correctly predicted. Do this over and over and you’ll be a profit machine. Next time we’ll talk about having an actual machine doing this for you even while you sleep.
