BTC/USD Binance.US - This is why I do not use stop losses.. I must start by saying that I believe Bitcoin and cryptocurrency investing offers the greatest opportunity for the common man to build wealth to have ever existed in the history of the world. Yet, it is still an endeavor that must be entered into cautiously and with research if one is to be successful.
The Daily Chart for BTC/USD on (the pathetic excuse of an exchange) Binance.US, serves as a teachable moment that should not be ignored. This chart demonstrates that if you cannot go to sleep peacefully without having a stop loss in place then you may need to reconsider being in this game.
The traditional methods of trading securities that were used in the regulated stock markets of the world and which subsequently made a lot of the famous traders of old very rich, predated high frequency trading and algorithmic trading bots on these mostly unregulated cryptocurrency exchanges. Yet, these outdated methods are currently being peddled and taught by the get-rich-trading-crypto-gurus today as the "secrets to crypto trading profits", despite this being 20th century methods that will cause you to lose your shirt if adhered to when trading crypto. Any endeavor to read and learn about crypto trading will, almost without fail, lead to a regurgitated list of the same old trading clichés. One such example: the so-called number one rule of trading. Always use a stop loss. The number one rule of successful trading is undoubtedly to limit your losses. This may be true, but if you are doing that with a stop loss on an exchange then you are asking to be robbed. Yes, you have to know when to cut your losses and move on, but unfortunately, because of the nature of swimming these dangerous financial waters, the sharks in the crypto space will eat your lunch, steal your crypto at bargain prices and laugh as you weep over what could've been. The order books are open. Anybody with a desire to do so can launch a trading "bot" using an API on most any crypto exchange. If that person or entity happens to have enough capital to clear the buy or sell side of the order books of an exchange, then they are free to do so. Once this is done, your crypto is gone at a bargain price with the classic stop loss shake out. Which is why if I cannot hold it without a stop loss, then I don't need it. If a drop in price doesn't present an opportunity for me to buy more, then I don't need it. If I'm not confident that it will be around in 2-5 years from now, then I don't need it. To limit losses, set a price alert on Tradingview, CoinGecko, or your exchange watchlist. If you are afraid it will drop too much before you can act on it, or if it suffers from a lack of volume and thus has a lack of liquidity, then perhaps it's best to HODL or leave it be.
If you don't know what any of this means, then that could be a sign that you may need to do a little more due diligence.
