Risk management is one of the fundamental ingredients of smart trading. In traditional markets, portfolio management takes an optimal mix of returns and risk in order to achieve target returns. Diversity, safe investments, and hedge funds are some of the examples of managing risks efficiently.
However, the foundational tool for risk management still remains the use of stop losses. In crypto markets, where the risks become more evident, the need for stop losses becomes even more crucial. Point Pay offers two types of trade: 1) market-based trade and, 2) limit-based trade. The stop loss trade allows you to secure your profits while keeping your trade exposed to risk to some extent only. For example, a trade where you have a long position in BTC bought at $5,800, where the crypto is currently trading at $6,000. Since your gains are unrealized, in order to protect your profits you keep the stop loss order at $5,900. This means that whenever the crypto would hit 5,900, the sell order would be executed automatically.
To conclude, stop loss is an extremely important part of trading. Along with protecting a trader from excess risks, it also allows a trader to enjoy life without having to excessively stick to the trading screen. Point Pay’s offering of limit-based orders tends to protect investors' capital.
