What Are the Differences Between Stop-Loss Orders and Portfolio Stop Loss

1. September 2022

In a volatile market such as crypto, investors constantly look for ways to safeguard their investments. In this particular market, like other markets, nobody would like to lose money. Therefore, it is essential to establish a price floor to protect your assets. This is a good reason to consider Stop-loss orders or portfolio-stop losses. But, there are some who are unable to determine the best place to set the prices. The robot handles withdrawals in minutes, according to several Prime Advantage reviews. If you put them in a way that is too far from the market they could result in losing many dollars in the event of a catastrophe. Our short guide will clarify the differences between these two strategies that traders employ to safeguard their portfolios. Understanding the specifics of stop-loss orders as well as the importance of portfolio stop losses to every trader.

The Idea Behind a Stop-Loss Order

A request to purchase assets for sale at a specified price is called a stop-loss. These orders aid investors to limit the losses they might face during trading. For example, if , for instance, you put your threshold of 5 percent lower than what you paid for the item, it could limit the loss to 5 percent. There are a variety of alternative limit and stop orders are available that are based on the timing of market strategy you’re employing. We can however identify two primary types of stop-loss orders, which we will discuss in the sections below.

Stop Order

An order to buy or sell a cryptocurrency at an amount that is “stop order.” Once the price of the coin reaches the price of a stop order then it is automatically market order. Purchase stop orders come with an expiration date that is higher than what is currently the market rate. In general, an order to stop a short seller will limit the possibility of a loss or help protect an established profit. In reality, shorting a currency could result in significant losses when the price rises and that is the reason for the popularity for stop-orders. The order to sell the coin at a lower price than the current market price is called a sell-stop order. A sell-stop is a good option to anyone who is considering a long position on the currency and who is concerned about unexpected market crash.

Trailing Stop Order

A trailing stop-order occurs when the trader doesn’t set a fixed price for the stop. Instead, a predetermined percent or dollar value is used by the system to close the position. Through constant changes the trailing stop value will be influenced by the price of the coin. For instance when the price of the coin increases, so will the stop price rise (and reverse). This is why an order that is trailing makes a traditional stop order “dynamic.” Therefore, this technique can be extremely effective if you don’t have a predetermined price threshold in your mind.

Extending the Concept to All Your Assets: Portfolio Stop Loss

Stop-losses are often a choice in making a trade strategy work on only one market pair. What about stops for portfolios? In this scenario it’s an approach that considers the entire portfolio value of the trader. Don’t think about individual coins. the stop-loss on your portfolio will affect all of your coins in the event of a bad market. The system converts all of the funds invested into stablecoin. There is little chance the portfolio will remain in decline after an algorithm converts it to a stablecoin.

Use Portfolio Stop Losses to make Shrimpy

Popular platforms like Shrimpy permit you to utilize the stop-loss function for portfolios. Alongside offering a portfolio stop-loss function, Shrimpy is a social trading platform and an automated portfolio management software. Stop-losses in a portfolio differ than those for individual coins as they track the total value of your investments. Shrimpy can transform all of your portfolio into one stablecoin in the event that the market hits the level of stop-loss that you set. Making sure that earnings are protected and avoiding losses are the two principal objectives of this method. Under the Shrimpy’s “Automation” tab, we can set up our stop-loss. The system will automatically activate the mechanism whenever its value is above a certain threshold. In this section, you will discover a number of parameters:

The automation of your portfolio will stop in Shrimpy after activating the stop-loss feature. That is, turning your portfolio to an stablecoin will end each automation. It is your decision to restart trading once you believe it’s the right time. Click on “Start Automation,” and the normal trading process on Shrimpy will start once more.