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What is an example of a trailing stop limit sell order in the context of cryptocurrency trading?

avatarMustafa AllamDec 26, 2021 · 3 years ago1 answers

Can you provide a detailed example of how a trailing stop limit sell order works in the context of cryptocurrency trading? Please explain the process step by step and provide an example with specific numbers.

What is an example of a trailing stop limit sell order in the context of cryptocurrency trading?

1 answers

  • avatarDec 26, 2021 · 3 years ago
    Certainly! Let me give you an example of how a trailing stop limit sell order can be used in cryptocurrency trading. Let's say you bought Ripple at $1.00 and you want to protect your investment in case the price starts to decline. You decide to set a trailing stop limit sell order with a trailing percentage of 4% and a limit percentage of 2%. If the price of Ripple reaches $1.20, the stop price would be automatically adjusted to $1.15 (4% below the highest price). Now, let's say the price starts to drop and reaches $1.10. At this point, a sell order would be triggered. However, the sell order would only be executed if the price goes back up to $1.12 or higher (2% above the lowest price). This way, you can protect your investment if the price continues to rise, but also have a safety net if the price starts to fall. It's a useful strategy for managing risk and maximizing profits in cryptocurrency trading.