Learning about Stop-loss and Take-profit is one of the most important things a beginner trader can do. Yet, they are also some of the most critical ways that advanced traders stay in the game and succeed. A stop-loss and take-profit orders help a trader make calculated and constant gains while limiting exposure to losses. They are an essential part of a trader’s risk management.
By setting a stop-loss, a trader disciplines his trading activity and informs the exchange how much risk he is willing to take with each trade. On the other hand, a take-profit is the limit that would make the trader satisfied with the trade.
Stop-loss and take-profit are tools used for closing trades automatically so that a trader does not have to check charts constantly. Their purpose is to limit the downside and the upside of trades. Especially in the crypto market that runs 24/7, these pre-made contracts make trading safer and less nerve-wracking. The orders save the trader from crypto market volatility, where crashes can happen in a matter of minutes. Likewise, the take-profit limit ensures that a trader takes profits and does not allow the market to swing against him and erase his gains.
A trader can place stop-loss and take-profit limits in two ways. First, the recommended way to do it is at the moment of opening a trade. The second one is setting them after opening the trade. Once the trader selects the orders, they will remain active in the system until reaching the specific price level. Therefore the order does not require a trader’s constant attention after setting it up.
But at what levels to set them? Traders use various strategies for placing them, and choosing the right one depends on the trader’s personal risk management and specific risk-to-reward ratio. Generally, traders do technical analysis and use moving averages, momentum, and market structures to define the loss and profit levels that are more probable and aligned with their personal strategy. But for example, a beginner could set a stop-loss to prevent a situation where he could lose all of his money or he can place a take-profit to ensure that he will not get too greedy.
How to place a Stop-loss and Take-profit on Huobi Futures?
- Open the Huobi Futures trading platform
- Navigate to the Order Zone
- When you have decided on all the variables of the contract, click Stop-Limit
- Chose a Take-profit price (USD) and a Stop-loss price (USD)
- Click “confirm” when you are ready with the proper limits and optimal N Price (USD)
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