How to Set a Stop Loss in Crypto Trading

A stop loss is the price that proves your trade wrong. It is a planned exit that protects your account when the market moves against you. A good stop loss keeps losses small while letting valid trades breathe.

Step 1: Define the invalidation point

Start with the reason you entered the trade. If price breaks the level that invalidates your setup, the trade is no longer valid. That level is your stop anchor.

Step 2: Add a volatility buffer

Crypto is volatile. If you place stops exactly on obvious levels, you may get stopped by noise. Add a small buffer beyond the invalidation point.

Step 3: Size the trade to the stop

Stop distance determines position size. Decide how much you are willing to risk, then size down until the loss at the stop equals that risk.

Common stop loss mistakes

• Moving the stop further away to avoid taking a loss.
• Using the same tight stop on high volatility assets.
• Placing stops on obvious round numbers.
• Ignoring fees and funding when calculating risk.

A quick checklist

• Is the stop beyond the level that invalidates your idea?
• Did you add a buffer for normal volatility?
• Is your position size based on that stop distance?
• Can you accept the loss without changing the plan?

A stop loss is a tool, not a punishment. When you size correctly, a stop becomes a normal cost of doing business. Use the calculator to match size to your stop distance.