Hey, welcome to the seventh lesson of the beginner village, which is also the opening piece of our 【Risk Defense Series】!
Recent updates have been slow, mainly tinkering with AI trading signal robots. If subsequent tests are stable, it will be opened for community friends to use.
Congratulations, you have completed all theoretical learning and tool preparation in the previous courses and are officially at the starting line of real trading. You have USDT in your account and may have your eye on a favorite cryptocurrency, ready to pull the trigger.
But please wait a moment!
Before you hit the highway, your coach will definitely advise you a thousand times to learn to brake first. In the cryptocurrency world, which has no speed limit and is full of risks, the 'braking' skill is a thousand times more important than the 'accelerator'!
In today's lesson, I won't teach you any secrets to making money, but just one core skill of 'capital preservation'. It's like the 'insurance' you buy for every trade, it's the 'seatbelt' and 'brake pedal' of your capital account.
This is take profit and stop loss. In 5 minutes, you will learn this strongest defense technique that will help you survive in the cryptocurrency world!
Segmented explanation
1. What are take profit and stop loss? - Your 'automated trading assistant' 🤖
Take profit and stop loss are essentially a preset 'automated sell order'.
It's like a smart alarm clock. You set it to 'must get up at 7 AM' before you sleep, and at 7 AM, the alarm will automatically ring to wake you up. You don't need to stay awake all night, constantly watching the time.
Similarly, take profit and stop loss mean:
Stop-Loss: you preset a 'minimum psychological price'. When the price unfortunately falls here, the system will automatically sell for you to avoid unlimited losses.
Stop-Profit: you preset an 'ideal profit price'. When the price successfully rises to here, the system will automatically sell for you to secure the profit.
In summary: take profit and stop loss mean letting you say goodbye to the anxiety of 'constantly watching the market', replacing emotion with discipline, and letting the program automatically execute your selling plan.
2. Stop Loss: your 'brake pedal', preventing disaster 🛑
In trading, what you must learn first is not how to profit, but how to stop losing.
The only purpose of stop loss: preserve capital and survive!
You must accept a fact from day one: making mistakes is normal in trading, and no one can always be right. Top traders succeed not because they never make mistakes, but because they can exit with minimal loss when they do.
The consequence of not setting stop loss: A single mistake can cut your account funds in half, or even to zero, completely losing the opportunity to turn things around.
The significance of setting stop loss: it is equivalent to setting an upper limit for the 'trial and error cost' of this trade. For example, you decide to only lose 10% at most, and once the price drops by 10%, the system will automatically help you 'cut losses and exit'. Although it hurts, you preserved 90% of your capital and can look for the next opportunity at any time.
Remember this iron rule: learning to stop loss is the dividing line between beginners and experienced traders.
3. Take Profit: your 'discipline ruler', overcoming human greed 💰
If stop loss is to combat 'fear', then take profit is to combat 'greed'.
Many beginners have had this experience: they have already made a 30% profit, but always think, 'Will it rise a little more?' As a result, the market reverses, and all profits are given back, even turning into losses.
The significance of setting take profit: it forces you to realize profits at a rational and preset position. Trading is not like lottery; we are not chasing every 'peak', but steadily taking the profit that belongs to our plan.
Remember: the money in the market is endless, but your capital can be lost completely. Putting profits in your pocket is the real victory.
4. Ultimate practical operation: How to set 'insurance' on the exchange?
Now, let's open the trading interface of the exchange APP and find that button that can save your life.
Find the order type: in the order area, you will see options like 'Limit', 'Market', etc. Click it, and find 'Take Profit and Stop Loss' in the dropdown menu (some platforms also call it 'Trigger Order' or 'Stop-Limit').
Set stop loss order:
Trigger price: fill in the 'brake' price you set. For example, if you buy at 100 and you hope to sell when the price drops to 90, then the trigger price should be filled as $90.
Commission price: the actual selling price, usually slightly lower than the trigger price to ensure the transaction, for example, $89.9.
Quantity: the amount you want to sell.
Set take profit order:
Logic is the same as stop loss, only in the opposite direction. You buy at 100, hoping to sell when it rises to 130.
Trigger price: fill in $130.
Commission price: fill in $129.9 (slightly lower than the trigger price to ensure it can be sold).
Click 'Sell', and your 'insurance policy' is preset. It will quietly lie in the system, with no transaction fee until the price touches the point you set.
Today, we learned to fasten the 'seatbelt' for trading (stop loss) and set the 'navigation destination' (take profit). This is the core discipline for you to survive in the cryptocurrency battlefield and ultimately achieve profitability.
✅ Today's task:
Open your exchange, don't place an order, just do one thing:
Just pick a trading pair (e.g., BTC/USDT).
Find and click on the 'Take Profit and Stop Loss' order type.
Simulate setting a stop loss order and a take profit order to familiarize yourself with those input boxes. This exercise may save your account in the future!
🚀 Next lesson preview:
Having learned how to defend against the risks of the market itself, we also need to learn to defend against the risks coming from 'people'. The cryptocurrency world is full of mixed characters and rampant fraud. In the next lesson, we will unveil the dark forest of the cryptocurrency world: (Avoiding 99% of pitfalls: the most common scams for beginners revealed), teaching you to develop a keen eye!
👋 Find it useful? Give a follow to not get lost!
If this lesson made you understand the importance of 'capital preservation', please give me a big thumbs up and click follow! Your support is my motivation to create the strongest survival guide for you! See you in the next class!
Click to view: past basic teaching and selected article content