Trailing stop automatically protects profits and limits losses in cryptocurrency market trading.
It “follows” the price of an asset at a certain distance.
If the price of the asset moves in a direction favorable to the market participant, it automatically adjusts, maintaining the specified distance from the current price.
If the price reverses and starts moving in an unfavorable direction, the trailing stop remains at the last level and, if this level is reached, triggers, closing the position.
If the price moves in a direction favorable to the position (up for long positions and down for short positions), an automatic adjustment takes place, keeping the set distance from the price.
If you are a beginner, start with small positions.
This will help you understand how this tool works and minimize potential losses.
Markets change and what works in one cycle may not be effective in another.
Regularly review your trailing stop strategy and adjust it based on current market conditions.
Volatility is a key factor when setting up this tool.
Study the price behavior of the asset to determine what is the optimal distance for it.
This will help avoid premature triggering of the order due to random price fluctuations.
A trailing stop is an important tool for risk management and profit protection in trading.
Its use requires an understanding of market conditions, asset volatility and adaptation to market changes.
Effective use can significantly improve trading results by automating the risk management process and helping to avoid emotional decisions.