I see many newcomers to crypto worry about the risk of losing money. Actually, there is a very useful tool that everyone should know about — it's called stop loss. Today, I will share detailed instructions on how to use it to protect your capital.

What is a stop loss? Simply put, it is an automatic order that helps you sell an asset when the price drops to a predetermined level. For example, if you buy Bitcoin at a certain price and set a stop loss at a lower level, when the price hits that threshold, the system will automatically sell on your behalf. This method helps prevent excessive losses on unfavorable trades.

Why use a stop loss? There are a few main reasons. First, it helps you control losses — you will know exactly how much money you could lose in the worst-case scenario. Second, it greatly reduces psychological stress. Once you've set a stop loss, you don't need to constantly monitor the screen, fearing the price will plummet. Third, it helps you stick to trading discipline, avoiding impulsive decisions driven by emotions.

There are two types of stop loss you need to know. The first is a fixed stop loss — you specify a specific price, and the order will trigger when the price reaches that level. The second is a trailing stop, which is smarter because it automatically adjusts the stop loss level as the price moves favorably. For example, if you set a trailing stop at 5%, every time the price increases, your stop loss will also rise, helping you lock in profits.

Want to set a stop loss on an exchange? The process is quite simple. First, log into your account. Then select the trading pair you want to work with, such as BTC/USDT. Next, find the Stop-limit or Stop-market order (depending on the exchange). You need to enter three main pieces of information: the stop price (activation level), the limit price (your desired selling price), and the amount of assets you want to sell. After confirmation, the order will be placed in the queue.

There are a few points to note when using a stop loss. Don't set it too close to your purchase price, as small fluctuations can trigger unnecessary orders. The crypto market is always changing, so you should review and adjust your stop loss regularly. Additionally, combine stop loss with technical analysis — look at important support and resistance levels, then place your stop loss at reasonable positions.

Currently, Bitcoin is at $67.64K (+0.47%), and this is a good time to start practicing with stop loss if you're not familiar. Remember, stop loss is not meant to completely avoid losing money but to manage risk intelligently. DYOR before trading!