Stop-loss Order

A stop-loss order is a type of order placed by an investor to limit potential losses on a cryptocurrency investment. It automatically triggers a market sell order when the price of the cryptocurrency falls below a specified threshold, known as the stop price.

Example:

Let's say you purchase 1 Bitcoin at $50,000 and set a stop-loss order at $45,000. If the price of Bitcoin drops to $45,000 or below, your stop-loss order will be activated, and your Bitcoin will be sold at the prevailing market price, helping to limit your losses.

Case:

Imagine you bought Ethereum at $3,000 per coin. Concerned about potential losses if the price drops, you set a stop-loss order at $2,800. If the price of Ethereum suddenly plunges due to market volatility to $2,700, your stop-loss order will trigger, selling your Ethereum at the prevailing market price close to $2,700, thus preventing further losses.