What is the difference between stop loss and trailing stop in the context of cryptocurrency trading?

1 answers

• Rubenilde SoaresDec 12, 2023 · 2 years ago
  Stop loss and trailing stop are two important tools in the arsenal of cryptocurrency traders. A stop loss order is like a safety net that protects traders from significant losses. It is set at a specific price level, and if the price of the cryptocurrency falls to or below that level, the order is triggered and the cryptocurrency is sold. This helps traders limit their losses and manage their risk. On the other hand, a trailing stop order is a more advanced tool that allows traders to lock in profits as the price of the cryptocurrency rises. The stop price of a trailing stop order is adjusted dynamically, following the price movement. This means that if the price goes up, the stop price also goes up, allowing traders to capture more profit. The main difference between the two is that a stop loss order is used to limit losses, while a trailing stop order is used to protect profits and maximize gains.
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