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How to Set Stop Loss on Binance

Setting a stop loss on Binance is done via the Stop – Limit order. If you have traded cryptocurrencies or invested in other markets such as forex, gold, stock CFDs, etc., you are very familiar with stop-loss placement. But if you are new to trading, we will learn about stop-loss orders and set the stop loss on Binance.

What is stop-loss?

Stop-Loss (often written as SL) is an automatic stop-loss order.

Traders use Stoploss orders to reduce losses for their trades when they don’t go in an unexpected direction. Using an SL order in your trading gives you control over how much loss you are willing to lose on that trade.

The stop-loss order in coin trading on Binance allows you to preset the price so that the order automatically sells the coin you own when the price drops. When placing a stop-loss order, you must set the sell price below the current price.

Why place a Stop Loss order?

Using automatic stop-loss orders allows you to control your risk even during sleep. If the price drops too low while you sleep, the exchange will trigger a stop loss and the coins in your possession will automatically be sold at the price you set to preserve some of the profit.

Without a stop-loss order, when the cryptocurrency market goes into correction, all your profits will be lost, even overnight. The Stop Loss order helps you reduce or control your loss.

“Don’t lose money before you want to make money” is the principle that helps you invest successfully, regardless of asset class. You never know what the market will look like tomorrow. Therefore, investing is always risky and you have to use stop loss when trading, especially in the cryptocurrency market.

Errors in placing stop-loss

Set Stop Loss too close

Using stop-loss helps you limit your loss in every trade. But if you put your stop loss too close, only regular market movements will cause your order to stop. This can make your loss rate higher than usual.

You identify the right trend, but placing the stop loss too close can cause the order to stop before your trade delivers a profit.

Therefore, you need to determine a safe distance to make your trade work, non-stop loss just due to small fluctuations.

Set Stop Loss too far

If you place the stop loss too close, your trade cannot withstand small swings. Conversely, setting a stop loss too far makes your transaction unaffected, but failure every time you hit the stop loss will be more significant. At that time, the stop-loss order is no longer effective in limiting the loss.

Change the stop loss not with the rules.

The habit of many traders is to follow the chart and constantly change the stop loss in the direction the trader believes. When the market is rising, the trader moves the stop loss higher, and when the market has a downward trend, the trader moves the stop loss lower, also removing the previously set stop loss.

Changing your stop loss on principle leaves the trade intact, but your stop-loss is no longer in effect. You can change the stop loss level; professional traders often do. But before changing your stop loss, you need to develop your trading rules and follow them. In particular, you must never restore your stop loss below the previously set level.

How to set the Stop Loss correctly.

Before placing an order to buy a particular cryptocurrency, you need to determine the first take profit and stop loss points in advance.

  1. Take profit, stop loss points must follow the Risk: Reward ratio (ratio of SL and TP) that you have predefined according to the strategy you have set.
  2. Determine the amount you will invest for the coin purchase order to be executed and determine the amount to lose if the trade reaches a stop loss after placing the order. The amount that can be lost when you hit the stop loss should be within your tolerance.
  3. Place orders based on predefined levels.
  4. After the transaction is active, set new stop loss levels and take profit according to the principle of optimizing trading.

How to Set Stop Loss on Binance

Here, we will learn how to set a stop loss on Binance according to the step-by-step step-by-step instructions below.

Log in to your Binance account or sign up for a Binance account if you don’t have one:

How to Set Stop Loss on Binance Futures

At Binance, there are only two types of Futures market orders that support the placement of Stoploss and Take Profit as soon as a trade is opened: Limit and Market Orders.

Setting the TP/SL level when trading on Binance Futures is quite simple:

  1. Click to choose the type of order you want to trade: Limit or Market
  2. Enter the number of transactions. With the Limit Futures order, enter the price you want to match the order.
  3. Check the box for TP/SL
  4. Enter the TP level – take profit. This level must be higher than the execution price of the order.
  5. Enter the SL – stop loss level, which must be lower than the execution price of the order.

How to set the stop loss on Binance Spot or Margin

To make a stop loss on Binance Spot or Margin, you must use a Stop – Limit order to establish a stop-loss order for active trading.

After opening a buy order, open another Stop – Limit order to set a stop loss for that transaction as follows:

Step 1: Select the Stop – Limit order type in the order window

  1. Enter the price to activate the Stop Loss order in the Stop box
  2. Enter the price to sell the coin in the Limit box
  3. Enter the number of coins you want to stop the loss in the Amount box.
  4. The Total box will show the amount you receive after the stop-loss order has been completed.

For example,:

You have purchased and have 9.7 LINK in your Spot Wallet. You want to set your stop loss at 22.91USDT so that if the market goes down, you won’t lose too much. Do the following:

  1. Select the SELL tab
  2. Choose your Stop-limit order
  3. Stop place at 21.95 USDT
  4. Set the limit to 21.91 USDT
  5. Quantity: 9.7

This order will sell 9.7 LINK at 21.91 USDT when the price drops to 21.95 USDT. You will then collect 212.5270 USDT in the Spot wallet.

Compare the amount of USDT you used to buy 9.7 LINK to see how much you lost or gained with this trade.

  • Note: You should keep the limit price not too close to the stop price because when the market drops sharply, the price hits the stop at 21.95 and drops further to 21.89; the sell order at 21.91 is not processed, the stop loss is not active.

Then, a window asks you to confirm the Stop Limit order you just placed. Click [Confirm] to confirm.

After placing an order, the order you just placed will be displayed in the [Open Order] pending window. If you want to cancel the stop-loss order, click the [Cancel] symbol at the end of the order line.

Conclusion

The above article helped people better understand Stoploss orders, especially how to use stop limit orders to place Stoploss on Binance. Stoploss orders allow you not to worry and monitor the market 24/7 to control your trading. Your task is to place the order, set the appropriate stop loss, take profit levels and let the market work. However, it would help build a reasonable trading strategy to avoid losing too soon due to a small fluctuation.

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