How to set stop loss on Binance: Step by step instructions

TutorialsAugust 26, 2021

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Setting a stop loss on Binance is done through the Stop – Limit order. If you have traded cryptocurrencies or invested in other markets such as forex, gold, stock CFDs, etc., you are very familiar with placing stop-loss. But if you are new to trading, we will learn about stop-loss orders and set stop loss on Binance.

What is stop-loss?

Stop-Loss (often written as SL) is an automatic stop-loss order. Traders use Stoploss orders to cut losses for their trades when they do not go in an unexpected direction. Using an SL order in your trading gives you control over how much loss you are willing to lose on that trade.

The stop-loss order in trading coins on Binance allows you to pre-set the price so that the order will automatically sell the coin you own when the price drops. When placing a stop-loss order, you are required to set the selling price lower than the current price.

Why place a Stop Loss order?

Using automatic stop-loss orders allows you to control your risk even while sleeping. If the price drops too low while you are sleeping, exchange will trigger a stop loss, and the coins in possession are automatically sold at the price you set to preserve some of the Profit.

Without a stop-loss order, when the crypto market goes into a correction, all your profits will be lost, even overnight. The Stop Loss order helps you to reduce or control your loss.

“Don’t lose money before you want to make money” is the principle that helps you invest successfully, regardless of the asset class. You never know what the market will be like tomorrow. Therefore, investing is always risky, and you must use stop loss when trading, especially in the cryptocurrency market.

Mistakes in placing stop-loss

Set Stop Loss too close

Using stop-loss helps you to limit your loss in each trade. But if you place your stop loss too close, just the regular movements of the market will cause your order to be stopped. That can make your loss rate higher than usual.

You identify the right trend but placing the stop loss too close can cause the order to be stopped before your trade turns a profit.

Therefore, you need to determine a safe distance to make your trade work, not stop loss just because of minor fluctuations.

Set Stop Loss too far

If placing the stop loss too close, your trade cannot withstand small swings. On the contrary, setting a stop loss too far away makes your transaction unaffected, but the failure every time you hit the stop loss will be more significant. At that time, the stop-loss order is no longer effective in limiting your loss.

Change the stop loss by not the rules.

The habit of many traders is to follow the chart and constantly change the stop loss in the direction the trader believes. When the market is up, the trader moves the stop loss higher, and when the market is trending down, the trader moves the stop loss lower, even removing the stop loss set earlier.

Changing your stop loss out of principle leaves the trade unstopped, but your stop-loss is no longer in effect. You can change the stop loss level; professional traders often do. But before changing your stop loss, you need to develop your own trading rules and follow them. In particular, you must never roll back your stop loss lower than the previously set level.

How to set Stop Loss correctly.

Before placing an order to buy a particular cryptocurrency, you must determine the first take profit and stop loss points in advance.

  1. Take profit, stop loss points need to follow the Risk: Reward ratio (ratio of SL and TP) that you have predefined according to the strategy you have set.
  2. Determine the amount you will invest for the coin buy order to execute and determine the amount to lose if the trade hits a stop loss after placing the order. The amount that can be lost when hitting the stop loss should be within your tolerance.
  3. Enter orders according to predefined levels.
  4. After the transaction is active, set up new stop loss levels and take profit according to the principle to optimize trading.

How to set stop loss on Binance

Here, we will learn to set a stop loss on Binance according to the detailed step-by-step instructions below.

Log in to your Binance account or sign up for a Binance account if you don’t have one:

How to set stop loss on Binance Futures

On Binance, there are only two types of Futures market orders that support placing Stoploss and Take Profit as soon as a trade is opened: Limit and Market orders.

Setting TP/SL level when trading Binance Futures is quite simple:

  1. Click to choose the type of order you want to trade: Limit or Market
  2. Enter the number of transactions. With the Limit Futures order, you enter the price you want to match the order.
  3. Check the box TP/SL
  4. Enter TP level – take profit. This level must be higher than the order execution price.
  5. Enter the SL – stop loss level, which must be lower than the order execution price.
How to set stop loss on Binance 2

How to set stop loss on Binance Spot or Margin

To place a stop loss on Binance Spot or Margin, you need to use a Stop – Limit order to establish a stop-loss order for active trade.

See more:

After opening a buy order, you open one more Stop – Limit order to set a stop loss for that transaction as follows:

Step 1: Select the Stop – Limit order type on the order window

  1. Enter the price to activate the Stop Loss order in the Stop box
  2. Enter the price to sell the coin in the Limit box
  3. Enter the number of coins you want to stop loss in the Amount box.
  4. The Total box will show the amount you receive after the stop-loss order is completed.

E.g.:

You have purchased and have 9.7 LINK in your Spot Wallet. You want to set your stop loss at 22.91USDT so that if the market goes down, you won’t lose too much. You do the following:

  1. Select the SELL tab
  2. Choose the Stop-limit order
  3. Place Stop at 21.95 USDT
  4. Set Limit at 21.91 USDT
  5. Amount: 9.7
How to set stop loss on Binance 3

This order will sell 9.7 LINK at 21.91 USDT when the price drops to 21.95 USDT. You will then collect 212,5270 USDT in Spot wallet.

Compare the amount of USDT you used to buy 9.7 LINK to see how much you lost or gained with this trade.

  • Note: You should keep the Limit price not too close to the stop price because when the market drops sharply, the price hits the stop at 21.95 and falls further to 21.89; the sell order at 21.91 is not filled, the stop loss is not active.

Then, a window asks to confirm the Stop Limit order you just placed. Click [Confirm] to confirm.

How to set stop loss on Binance 4

After placing an order, the order you just placed will be displayed in the pending window [Open Order]. If you want to cancel that stop-loss order, click the [Cancel] symbol at the end of the order line.

Conclusion

The above article has helped people better understand Stoploss orders, especially how to use stop limit orders to place Stoploss on Binance. Stoploss orders allow you worry-free and monitor the market 24/7 to control your trading. Your job is to enter the order, set the appropriate stop loss, take profit levels, and let the market work. However, it would help build a reasonable trading strategy to avoid losing too soon because of a minor fluctuation.

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