Key Takeaways
- Take Profit and Stop Loss orders allow traders to automate closing a position when the coin reaches a specific price point so they can prevent more losses and lock in gains;
- These order types are great for short-term traders who want to save time and not have to constantly watch the charts, but might not be suited for HODLers;
- You can choose the TP or SL trigger price by setting a certain percentage above or below the current price, deciding on a Risk/Reward ratio, or other strategies.
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Ever heard the saying, “Winners know when to quit?” I bet you have – and I’m here to tell you that it’s just as true for crypto trading as it is for everything else! If you’re tired of missing the perfect exit window by a split second and don’t want to stare at market charts all day, there’s no better time to learn how to utilize Take Profit and Stop Loss orders in crypto exchanges.
Take Profit (TP) and Stop Loss (SL) are some of the most popular exit orders designed to automatically detect and execute the best crypto sales while minimizing the risks and securing your profits within a safe range. They take emotional bias and FOMO out of the equation and open up opportunities for more precise trading strategies.
You’ll find these order types on pretty much every centralized exchange, including household names like Binance, Kraken, and Bybit. With my step-by-step guides, you can get started right away, discover the best TP and SL strategies, and learn some first-time tips.
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Table of Contents
- 1. How to Use Take Profit and Stop Loss Orders: A Comprehensive Walkthrough
- 1.1. Setting Up TP & SL on Binance
- 1.2. Setting Up TP & SL on Kraken
- 1.3. Setting Up TP & SL on Bybit
- 1.4. Setting Up TP & SL on Robinhood
- 1.5. Setting Up TP & SL on Crypto.com
- 2. Take Profit (TP) and Stop Loss (SL) Explained: A Quick Crash Course
- 3. Should You Use Take Profit and Stop Loss Orders When Trading Crypto?
- 3.1. Benefits
- 3.2. Limitations
- 4. Best Take Profit and Stop Loss Strategies for Crypto Trading
- 5. Conclusions
How to Use Take Profit and Stop Loss Orders: A Comprehensive Walkthrough
Implementing Take Profit and Stop Loss in crypto exchanges is far from rocket science – it will only take a few clicks. That said, the details are going to vary across different exchanges.
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Setting Up TP & SL on Binance
As of writing this, Binance is one of the largest centralized crypto exchanges, with over 270 million users worldwide across 180+ countries. Its versatile trading options, large selection of cryptocurrencies, and affordable trading fees helped entrench it as one of the fan favorites in the crypto community.
📚 Check Out: Binance Review
When it comes to Take Profit and Stop Loss in crypto spot trading, Binance allows users to set either of these orders separately or combine them into one. The either-or option can be achieved through the Stop Limit order, while the OCO (One-Cancels-the-Other) order is meant to set both a floor and a ceiling for your preferred price range, and whichever price is reached first gets executed. In addition, cancelling one order automatically cancels the other, too.
I’m going to show you both options in this guide:
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For a Stop Loss order, choose a price point that’s lower than the current market price, and do the opposite for a Take Profit order.
When the coin reaches the Stop Price, your order gets placed, and when it gets to the Limit Price, it will be executed. So, for an SL order, you want your Stop Price to be slightly higher than your Limit Price, and for a TP order, go in the other direction.
The TP Limit price should be above the current market price, while the SL Trigger price needs to be lower than the current market price.
That’s it! You’ll see this order on the Open Order(s) panel below or in the Orders section of your user dashboard. You can cancel it anytime by clicking the trash can icon next to it.
Setting Up TP & SL on Kraken
Launched in 2013, Kraken is one of the oldest among the A-list crypto exchanges. It features 400+ cryptocurrencies, an intuitive user interface with the Simplified and Pro modes, margin, and futures trading, as well as a staking platform.
📚 Check Out: Kraken Review
On Kraken, there are 4 types of relevant orders available: Stop Loss, Stop Loss Limit, Take Profit, and Take Profit Limit. The SL/TP Limit option lets you specify the price point at which your order is placed and another one at which your order is executed, while the regular SL and TP orders only take into account the execution price. The combined SL & TP option will be introduced soon, but as of writing this, there’s no way to initiate an OCO order.
However, what you can do instead is automate a separate or combined TP/SL order as a bracket order, or a secondary order. In a nutshell, you can place any other type of order (except for the Trailing Stop Order, which isn’t compatible) and then have the exchange automatically execute a TP/SL order as soon as the market price reaches your minimum floor or maximum ceiling.
Here’s how to execute Take Profit of Stop Loss in crypto on Kraken:
If you picked Stop Loss, enter only the Trigger price (lower than the current market price), and if you chose Stop Loss Limit, enter a Trigger price (at which your order will be placed) and then a slightly lower Limit price (at which your order will be executed).
If you picked Take Profit, enter only the Trigger price (higher than the current market price), and if you chose Take Profit Limit, enter a Trigger price (at which your order will be placed) and then a slightly higher Limit price (at which your order will be executed).
All done! You’ll see this order on the Conditional Orders panel at the bottom of the page immediately, and can cancel or edit your order right away.
Setting Up TP & SL on Bybit
Bybit’s massive list of 1900+ cryptocurrencies and competitive trading fees have earned it a spot among the most popular centralized exchanges. Its other benefits include flexible staking options, advanced trading types (such as copy trading and pre-market trading), and a crypto payment card.
📚 Check Out: Bybit Review
Bybit’s Take Profit and Stop Loss options might not seem as clear-cut at first glance, but let me break it down for you: it has 3 relevant order types:
- TP/SL order allows you to execute either strategy with a single trigger price point, meaning that you can turn it either into a Take Profit or a Stop Loss order, but not both at the same time.
- Conditional order does the same thing, except it doesn’t actually trigger an execution when you place the order, and your funds won’t get reserved until the order is fulfilled.
- OCO (One-Cancels-the-Other) order lets you establish both TP and SL trigger price points, and the order is executed as soon as it reaches one of these price points.
Without further ado, let’s explore how to set Stop Loss and Take Profit in crypto on Bybit:
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Here you go! You’ll find your order on the panel below under the relevant tab. From there, you can adjust your price point(s) or cancel the order.
Setting Up TP & SL on Robinhood
Unlike the other platforms I’ve covered here, Robinhood is more than just a crypto exchange: you can also use it to trade stocks, options, and ETFs. It offers some unique perks, such as buying Bitcoin with zero fees and competitive SOL and ETH staking yields.
📚 Check Out: Robinhood Review
Setting up Take Profit and Stop Loss in Robinhood crypto exchange is pretty simple and intuitive. There’s a Stop Order, which executes an SL/TP Market order, and a Stop Limit order, which carries out an SL/TP Limit order (unfortunately, there’s no OCO option). As a neat bonus, there’s a built-in option to implement the Time-Based strategy by choosing to automatically cancel the order once a certain amount of time has passed.
Here’s how to handle all this on the mobile Robinhood app:
![Stop loss in crypto: enter the price and click [Continue] on Robinhood.](https://assets.bitdegree.org/images/stop-loss-in-crypto-robinhood-price.jpg "Stop loss in crypto: enter the price and click [Continue] on Robinhood.")
![Stop loss in crypto: enter the amount and click [Continue] on Robinhood.](https://assets.bitdegree.org/images/stop-loss-in-crypto-robinhood-amount.jpg "Stop loss in crypto: enter the amount and click [Continue] on Robinhood.")
That’s it! After setting up Take Profit or Stop Loss in Robinhood crypto exchange, you can sit back and wait for your order to either be executed or cancelled automatically.
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Setting Up TP & SL on Crypto.com
Crypto.com is a respected centralized exchange that offers 400+ assets, advanced trading options (such as OTC trading), and a user-friendly interface on both web and mobile.
📚 Check Out: Crypto.com Review
This exchange’s TP and SL setup is pretty simple and straightforward. It has Take Profit, Stop Loss, and OCO orders (the latter lets you set up both TP and SL trigger prices, and whichever is reached first gets used for execution).
Here’s how to use Take Profit and Stop Loss in Crypto.com:
If you picked Take Profit, enter the price that’s above the current market price, and do the opposite for a Stop Loss order. Choosing a Limit order instead of a Market order also lets you specify another price point at which the order will be executed, rather than just initiated.
That’s all! You’ll see your order under the Trigger Orders panel below and can cancel it anytime you want.
Take Profit (TP) and Stop Loss (SL) Explained: A Quick Crash Course
At this point, you’ve probably gotten the gist of how those two concepts work, but if you still need some clarification, let me elaborate. What is Stop Loss in crypto trading, and how to make the most of it?
To put it simply, a Stop Loss order is a type of order that lets you set up a predetermined price level the crypto asset you previously bought can reach before the exchange automatically sells it to prevent you from losing more money.[1] This is aimed at crypto enthusiasts who’re actively trading crypto to make a profit from the price difference when buying and selling.
Let’s say you just bought 1 BTC for $90,000, with the intention of holding on to it until the price rises and you can sell it to reap a profit from the price difference in your favour (as in, selling it for more than you bought it for). However, to your disappointment, the price ends up falling to $87,000.
Now, for the optimists among us, there’s always the “wait and see” option. But if you don’t trust your intuition and would rather limit your losses than hope for the price to make another U-turn, you can use of the best stop loss strategies for crypto trading I’ll outline below and set up a controlled exit by telling the exchange to automatically initiate a sell order if the price drops to a certain level.
While figuring out how to put Stop Loss in Crypto.com and other exchanges, check if they offer both Market and Limit SL orders. Choosing a Market order could result in exiting at a lower price than you intended because of slippage.
That’s it for Stop Loss in crypto – as you can probably guess, Take Profit has the same idea behind it, only reversed. Rather than limiting your losses, the goal here is to lock in your gains and exit the position now, just in case the price trajectory shifts downward. This is exactly what the essence of how to take profit in crypto comes down to, after all!
To reuse the same 1 BTC for $90,000 case scenario, imagine watching eagerly as the price keeps going up, refusing to sell your coins because you’re holding out for it to rise even more… only to see your fortunes turn and the price of BTC fall to $85,000, meaning that if you pulled out and sold your assets now, it’d be at a loss instead of profit.
.jpg "Stop loss in crypto: a Bitcoin in front of a market chart with a downward trajectory.")
This is where the Take Profit order comes to the rescue: you can simply set the highest price you think BTC is likely to reach within the amount of time you intend to sell it (or, preferably, use one of the Take Profit strategies I'll tell you about shortly), and the exchange will automatically initiate a sell order, basically empowering you to quit while you’re still ahead.
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Should You Use Take Profit and Stop Loss Orders When Trading Crypto?
When it comes to Take Profit and Stop Loss in crypto (or any other tool, strategy, or technique, really), there’s one thing to keep in mind: just because you can, doesn’t always mean you should! The above-mentioned order types could be the missing secret ingredient in your recipe for racking up crypto gains, but – and I can’t stress this enough – they’re not for everyone.
Benefits
Starting off on the bright side, there are some good reasons to give TP and SL order types a shot:
- Emotion-Free Trading. We’re only human, and this means we’re inevitably susceptible to being driven by our biases and emotions to some extent. Instead of trying to fight it, why not simply take it out of the equation? TP/SL introduces an element of automation based on pre-determined parameters and prevents impulsive decisions spurred by FOMO.
- Strategic Thinking. TP and SL orders necessarily require having some sort of plan in mind, rather than just going with the flow or making random decisions. This will help you develop a more strategic mindset and get better at refining your approach by tracking and comparing results.
- Risk Management in Volatile Market. One of the essential rules on how to take profit in crypto is to try and minimize your losses as much as possible – but this can seem like a losing battle when it comes to the notoriously volatile crypto market. TP and SL help automate your orders so that you don’t have to depend on your luck or reaction time to get ahead.
- Time-Saving & Convenience. Who wants to stare at the market charts all day, trying to glimpse an opportunity or predict a disaster? With TP and SL, the exchange will automatically place and execute orders on your behalf so that you can handle more positions at a time or have your hands free to do other things.
- Versatility. TP and SL orders are available and can be adapted for many types of crypto trading: not just spot but also margin and futures, too. They’re found on practically every major crypto exchange, even though the implementation might vary across different platforms.
In a nutshell, the Take Profit and Stop Loss advantages boil down to giving you an automatic safety net so that, even if you miss your mark, you won't lose more money than the specific amount you've agreed to sacrifice.
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Limitations
That said, these tools aren’t always all they’re cracked up to be. Here are some potential caveats and downsides to be aware of:
- More Time and Effort-Intensive. Unlike simple Market or Limit orders, TP and SL orders require putting more thought into your decisions, which could backfire if you lack experience and in-depth knowledge of the crypto market.
- Risk of Premature Exit. TP and SL are all about minimizing risk – which is great if that’s your primary goal, but if you miscalculate, it ends up limiting your rewards, too: for example, the downward price shift might be only temporary, with the market correcting in the opposite direction.
- Incompatible With Some Strategies. While TP and SL are pretty versatile, they’re still better suited for short-term trading strategies, such as scalping (making frequent trades to capture the market fluctuations and make a profit by capitalizing on price differences[2]), and not for traders who prefer to HODL, for example.
- Partially Filled Orders. If you place a TP Limit order and the market undergoes a sudden spike and dump, your order might only get partially filled. This is especially likely for exchanges with lower liquidity for your trading pair.
In other words, if you’re more of a “buy it and hold on to it” type of investor who doesn’t want to get too bogged down with strategies, it might not be your cup of tea. But if you’re a busy trader determined to fine-tune the best possible risk-and-reward ratio, learning how to set Stop Loss and Take Profit in crypto exchanges could save you a lot of money down the line.
Best Take Profit and Stop Loss Strategies for Crypto Trading
So, you know your way around these two handy order types – what now? How should you actually go about determining the right trigger price to achieve your optimal risk/reward scenario?
To wield this tool effectively, you need to familiarize yourself with the best Stop Loss strategies for crypto trading. Here are a few approaches you could go for:
Explanation | Example (after buying 1 BTC for $90,000) | |
|---|---|---|
Dollar Stop Loss | Pick a specific amount of money you’d be willing to lose. | If the most you’d be prepared to lose is $2,000, set the SL trigger price at $88,000 ($2,000 away from your entry price). |
Percent Retracement Stop Loss | Instead of using a specific amount of money as a gauge, use a percentage instead. | Let’s say the maximum amount of loss you could tolerate is 10%. Set the SL price at $81,000 (10%, or $9000, away from the entry price). |
Volatility Stop Loss | Place your SL trigger price further away from the current market price if the market is volatile right now, and closer if it’s relatively stable. You can use indicators like the Average True Range (ATR). | If you find out that BTC's 14-day ATR is $2,500, you could set your SL price at $85,000 to take this into account while leaving twice the margin room for fluctuations. |
Standard Deviation Stop Loss | This strategy is based on standard deviation from the average price – a statistical measure of how far the price typically moves. | You've calculated or charted the 20-day standard deviation and found that it's $3,000. For a 2 standard deviation, your SL price would be $84,000. |
Moving Average Stop Loss | This strategy uses moving averages (like the 50-day or 200-day MA) as dynamic support/resistance. You hold a position as long as the price stays above (or below) the selected MA and exit if the price breaks that level. | Let’s say the current 50-day EMA for BTC is $87,500. Set your SL price just below the 50-day EMA to account for small pullbacks (like $87,000). |
Risk/Reward Ratio | Calculate the ratio between your Risk (the difference between your entry price and your SL) and Reward (The difference between your entry price and your TP), and stick to 1:2 to 1:3. | For a 1:2 risk/reward ratio, your SL price should be $88,000, and your TP price should be $94,000. |
Time-Based | Set a specific period of time within which you expect the price to rise/fall. If it doesn’t, close the position. | If the BTC price doesn’t move by more than 5% within two weeks, exit your position regardless of whether it’s a profit or a loss. |
Trailing Order | Set up a Trailing order to automatically adjust the TP price below a certain threshold. | Once you set a Trailing TP of 5%, if the price of BTC rises to $94,500 (5% gain), your TP trigger price is now set to 5% below the highest price reached, and the order is executed when the price stops rising and falls below 5% of the highest price. |
Table: Take Profit and Stop Loss strategies.
As you can see, there are plenty of ways to utilize Take Profit or Stop Loss in crypto. Make sure to try out at least a few until you get the hang of it and develop your own preferences. As a side note, any of these can be turned into a crypto Take Profit strategy if you reverse the numbers and go the opposite direction.
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Conclusions
Mastering Take Profit and Stop Loss in crypto exchanges could take the guesswork out of deciding the best exit point and save you a lot of time, not having to monitor the charts like it’s your full-time job. What’s more, you won’t need to worry about succumbing to FOMO during a moment of weakness – once you set things up, the exchange will do the rest by placing and executing orders on your behalf.
All you have to do is pick your exchange, choose a trading pair, and decide on the best strategy that aligns with your goals and preferences. Just keep in mind that this approach is better suited for short-term trading, and take into account some other nuances, such as the difference between TP/SL Market and Limit orders and the possibility of slippage and liquidity issues.
The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.
Scientific References
1. Liston P., Gretton C., Lensky A.: 'The Role of Stop-Loss Orders in Market Efficiency and Stability: An Agent-Based Study';
2. Marushchak S., Bezuhlova I., Misiukevych V.: 'Trading Strategies in the Cryptocurrency Market: Evaluating Their Effectivenes'.
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