Topic: Is this also your strategy to avoid hitting your stop loss early? (Read 449 times)

it is common practice in trading to start with a low margin and low leverage, especially when you are new or unsure about a particular trade. This approach can help you reduce the risk of significant losses and increase your chances of success, this is a best practice for a newbie

Ultimately, the ideal leverage and margin levels depend on your personal risk tolerance, experience, and overall trading strategy

This is without a doubt the main reason for choosing to use high leverage, but it is a mistake no matter how we look at it, after all the more leverage you use the higher the risk you are taking, the person that made so much money from such a low amount of money was probably lucky and he does not know it, after all if 100 people do the same and one gets successful then that person gets all the attention and people ask for his advice, but what they do not see is the other 99 people that lost everything to the markets relatively quickly by taking such a high risk.

The fact that you can't get rich overnight with regular spot trading is the main reason why those people do not do it. I am not saying that you can't, but the way it's done is not that simple and it takes time, and that is why we see a ton of people who do high leverage trading in crypto. I know some famous trader turned 70k+ into 1+ million dollars during the hype period for example, you couldn't make that without leverage, or at least it would require you to find the highest earners constantly.

This is why they jump into higher risk trading methods, because they believe that they could make a lot of money that way and that's the main problem.

Actually low or high leverage can all be set. It's just that the risk of high leverage will certainly have high liquidation, this is not recommended. All levels can have advantages and disadvantages so hazard management and analysis is essential. I also prefer the Spot market because the risk seems lower. The strategy adjusts to what you think is comfortable and profitable, no need to feel like a hassle. Because I believe everyone has a different strategy.

For those traders that do worry about liquidation whether it's just low leverage or he's into a higher one, it's better to go with the spot market.

You'll have no worry and what you earn it is as-is with it based on how much you trade and the gain it had in the market with the pair you trade.

The same as you, I'm staying with the spot market and I do not worry if I'll be liquidated or not and I can also hold there if I want to.

Taking low margin and leverage means taking lower risks. Although this also means lower profits to be gained. But as long as we are consistent, this doesn't matter. I personally also prefer to choose using low margin and leverage when I was still trading in the future or with leverage. For, I am not a high-risk taker enough.
However, everyone must have their own choices, sometimes, some traders (mostly high risk-takers) will prefer to choose high leverage to gain high profits even in only few trading activities.
Once more, it is personal preference based on each strategy and lso management of fund and risks. They are related each other.

I prefer to do it in the spot market. With low Margin and low Laverege this makes us take advantage, because we can control it. But if liquidation still worries you, I think the spot market is the safest place to trade. You will keep everything in your account safe if you can use the spot market strategy well. Most of the strategies we use make us confused in trading, to be more profitable in trading I can still rely on the spot market.

I don't think you should calculate in this manner, rather than this way just simply take the trade with a stop loss and take profit, your stop loss should be defined by the maximum amount of money you are willing to lose on the trade, based on this amount you should start and end the trade  if it does not goes into profit, adding up to profitable trades is a good idea but this is successful only in case of a few patterns like in cases of breakout you might not get a chance to enter on a second point because move could be so quick.

Or even better before you use any strategy in a live market it is necessary to paper trade the strategy and if it does work then it makes sense to begin to use a little bit of money at real markets to see if we can make it work for real, however if the paper trade test indicates that this is not a reliable strategy then you have saved yourself the trouble, time and money you could have lost, something that is not small in a market in which the competition is so high and it is difficult to obtain profits from it.

Also, it depends on the coin itself. Because each coin has their degree of trading activity. Some move faster than the others, depending on how it is heavily traded and how much volatility is involved. Because for example, in small cap coins, the movement is easy to manipulate even with the injection of small funds, hence, you will see a large percentage of change. You can always try your hypothesis in this market. But better use small funds if you are not ready with the outcome.

Test it out for yourself if it does work because you wouldnt know if it does work until you do apply it into  your trades.Putting up shallow Stop losses could really easily be triggered or hit up because of volatility and since we

know that we arent dealing with forex or indices or stocks which does have minimal movements but here on crypto space where 5-10% movement is really just like default thats why monitoring your stop losses would be

good or much better if you dont set anything at all specially if you are just dealing with active trading then it wont really be that necessary.

I have not really thought about it but this is an additional risk, if people use a small amount of leverage and they happen to do well just out of random luck then they are bound to try to increase the level of leverage they have been using thinking they have master it already, and then when they do happen to make a mistake and they read the market wrong then that is when they can lose massive amounts of money.

So I still stand by my previous recommendation, only expert traders should make use of leverage and most of the time those that choose to not listen to this simple advice will have to find out the hard way why this was  a bad idea.

by using a small leverage in order to have a small risk too, then this seems to be an exercise. but we should not be tempted to immediately use large leverage, because if we succeed with small leverage in a row, it will come to mind to use large leverage in the hope of getting big profits soon. the wrong way for things like this, because they have not been able to control their own psychology. even though it is patience that must be maintained until we understand market habits work

leveraged trading we usually fight with lots, many of the novice traders can't count lots so they trade with over lots, which can result in margin calls. therefore for novice traders must be able to train psychology, or if not using spot trading it will be safer for the capital used. the most important thing is that if we want to learn then we will gradually understand by itself, and also determine the attitude of ourselves it is very important to know our progress in trading

This becomes hard for OP as he is trying to put himself in a place where he is not yet fully gain knowledge about trading. It is better for OP to start learning spot trading first before stepping up on leverage and margin trading. I'd presume, in this way this makes him fully understand how trading works.

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No rushing OP and have to be aware that leverage trading is somewhat difficult for the beginner and those who just have limited knowledge. It is found to be the best to start from the basic (spot trading) and make use of that experience for the next level.

The method is usually helpful if you are a regular trader, like maybe if it is your full time job. That way you would be a trader anyway and you should be good at it, if you are not good at it then why are you doing it as a full time job. This results with a situation where you would be making a profit a bit bigger and would allow you to profit a lot more.

This is how people approach leverage, it is a method where you know you should be right because it is your job and if you are right then why not make a bit more profit. Not everyone makes a profit, but that is the type of thinking they do before then join in. All others who do i,t do it because they have no idea.

That makes too much sense, today newbies do not want to go through the trouble of learning how to walk and they want to run from the beginning and reach their goal as soon as possible, the truth is that very few people should be using leverage because as we know if you happen to make even a single mistake while you are using it then the consequences for you can be terrible, it is better to master spot trading first and once you have been profitable for years then you could try leverage trading, but it seems no one wants to take their time during their trading journey anymore.

This is a kind of reinsurance, a very cautious strategy.

Why not try trading with spot at first place and then become a pro at it.
After that may be you can try using leverage and try to increase it from 2x to 5x as and when you progress at your trading skills.

Gunbot has been innovating a lot because for sure there's a learning curve in order to completely use it correctly but with the Gunbot School and how it became social, it has become a lot easier to learn it because there would be people to guide you throughout the journey with Gunbot.

You could also PM me if you have any questions, I would be willing to assist you for sure.

A stop loss is used in leverage trading such as futures, they are designed to stop you from sustaining heavy losses by setting an exit point for a trade that goes in the wrong direction for you. This is a measure to prevent your position from being liquidated. Best to avoid leverage trading though if you don’t know what you’re doing as it’s easy to get completely wiped out in a single pump or dump. If you do ever get involved in futures trading, ALWAYS set a stop loss.

This is true. If you just open another position to increase the size of your position, the liquidation price will still gonna be the same but only the entry price will adjust base on the average of all the price entry that he made in proportion to the size. Increasing the margin is what makes the liquidity price create space but it will not gonna change the initial size of the investment yet the additional margin will be lose once the new liquidation price will hit.

it is definitely a strategy but generally depend on individuals interest. Your assets and experience address how much risk you can carry. Particularly those who are novice in the trading site they should reduce margin as much as possible and set stop loss so that they can survive in the platform.

Interesting. I need more info from you on Gunbot. I used to read about it a lot earlier but somehow I dropped the idea as it needs proper settings and if we are having set up in wrong way then things could really turn upside down. Though I had this trial earlier I might just start it over again with detailed info. Im not sure but I am hearing a lot about bot trading these days out of know where. Lolz. I might ask you @crwth in pm.

Well as far as stop loss is considered it is close thing to automation but you still need to keep focus on your trades otherwise trouble trouble! Thats why the bot comes in picture for safer and longer trades. 

Actually it is better to have a start with this method if you're a beginner, firstly it help to cut loss and thereby reducing the extent at which you may loose your coins, but why some people choose this method probably is to participate on many Leverage positions within a day or short period of time, they are the the scalding and sometimes swing traders, but i think the best advice here is for you to discover your own best trading strategies.

For me before placing an order i would like to see some retest first or a sign that my prediction is accurate in a particular trend to assure that my stop loss would not be hit afterward. Because to be honest its always happened to before when I'm scared to don't miss the right time ro enter, but always hitting my stop loss and end lose. so i made an adjustment..

This means that if you want to do stop loss in there, you need to arrange it according to the whole leverage level. If you are going to lose it all with just 1% drop then make it a quicker and closer thing, like 0.5% for example, or if you are going to lose it all with 5% then you could do it 3% for example.

I still think that if you are in high leverage situation then you would probably not need a stop loss, that is a better thing in spot trading if you ask me. Because in the leverage trading, specially in the high levels like 100x for example, it is obvious that you are risking all of the investment in return of making a decent return in quicker time hence scalping kind of very short term trading is advisable to avoid encountering stoploss situations.

The stop loss cannot depend on the size of the leverage. But the leverage is directly related to the order liquidation price. Accordingly, the higher the leverage, the closer the liquidation level is and the higher the chance of losing your deposit.

Honestly, you just end up losing more rather than protecting it.
I suggest not to follow that strategy, it wasn't helping you anymore. You'd better set your low margin and low leverage not far from the liquidation price for this it helps you easily cut the losses once the price fall.
https://blog.tokenomy.com/education-tutorial-eng/what-is-stop-loss-in-crypto-trading/

But I suggest trying to communicate your trade, making some discoveries helps you understand the impact of the STOP-LOSS strategy.

If you are speaking about the future trading.Then you need to do low leverage and low margin.And you should keep the liquidation with high volume.Because only the liquidity will save you from the full loss.When the price of invested coin will further decreased,you should do of the adding of the liquidity again.You should do this till the full amount of the investment is recovered.

Your choice! Just make out some adjustment whenever you do see that it could really be trigger out easily because this had been the main problem when you do make out some SL's too shallow.
Even if you arent dealing with high leverage or margin but still volatility could really make things even more worst if you dont really make yourself that aware on how thing works.
Just see for yourself and made out appropriate actions depending if it does work or not.Its a matter of trial and error imho.

Personally I have always thought that only a selected few should use leverage at all and the rest should simply avoid it as the risk that you lose it all raises exponentially the more leverage you use.

Since even a low amount of leverage like 3x and 4x can be more than enough to destroy your account relatively quickly, now some may argue that a stop loss can be more than enough to save them, but we know that when there is a high level of volatility in the market slippage can be enormous, so even with a stop loss your losses can be way higher than what you thought and they can be more than enough to erase almost all the profits you got during a bull market.

If you're not fond of leveraging.

You better stay on spot trading but I get the idea of being used to it if you're not going to try it. Just stay with the spot market if you're not yet prepared for it.

But if you're like testing then test out with low leverage with an amount that you're totally fine if you don't know when you'll be liquidated.

If you are bad with spot trading, you should never touch leverage, margin trading or future trading.

I don't understand what you mean. Avoid hitting your stop loss early, what does it mean? Stop loss is a tool to protect your capital in case of downward movement. It does not mean all times your stop loss order filled, price will fall deeper. Sometimes, price will turn oppositely after hitting stop loss price. It can be a dead cat bounce or a real recovery but don't worry about it. Because protect your capital is more important than gambling and see it goes away by market massacre.

I agree with you. Don't put yourself in a position that we don't understand so that it won't give us trouble. Trading in the spot market can provide an opportunity for profit if you don't understand how to trade futures. You don't need to take bigger risks like in futures trading, and you have to wait for the price to go up and down to enter the market. If you have successfully bought the coins, you just have to wait until the price increases and sell your coins.

I believe it will always be possible to change your leverage or even add more to your positions if you are really positive.
But for me, I am not a fan of this strategy.
Before I enter to trade, I plan all things, fixed position size, fixed price entry, fixed take profits price or partial take profits price.
If it will not matter at all to you, you can always adjust your position size or leverage anytime especially if you are confident.

It is best not to be greedy, the cause of loss.

Assuming you use 1x margin and the market price direction favors you, then you increase your margin to 2x after making some profit already, if the market price go against the position opened, remember the price will be closer when you will start to lose. This is not a good strategy. It would be better to just close the position and take profit with you or still leave the position opened if your analyses predict the market to still go further in your direction taken.

Some experts can though start from 1x margin, if the market favors them early, they close the market and make profit, but if the market did not favor them at first, they know they have a far range liquidation price which seem impossible to happen, they can increase the margin to 2x after the market has not favor them to certain price so that if the market later go in the direction taken, the price to when they will be making profit will get nearer to the market price. So some people can be 3x leverage traders, but because of disappointment that may first occur, they can start from 1x so if the market do not favor them at first and they predict correction to happen, they can increase the margin from 1x to 3x. But this is very risky and should be done by experts.

If you are going to use lower leverage and afraid of liquidation price why not stay in spot market? It is much safer than the futures trading but don't get me wrong they are both risky but trading with leverage is like multiplying the risk you can get.

And I agree with @Zackgeno96 I don't think you can call that as a strategy.

Understand this that low margin and low leverage are not the same thing with stop loss so they function differently. If you have chosen a low leverage to trade with it means you don't want to take alot of risk on your account, that you don't want to carry too much trade in your account at the same time and this will also reflect in your margin level when your account is burning down or increasing. Stoploss is to avoid you from losing beyond a certain limit. You set your stoploss yourself and the exchange provide leverage for you to choose from.

I don't think you can consider that as a strategy and lowering and increasing your leverage is not strategy either it was just increasing risk and lowering risk for me so I don't think it is strategy.

Leverage is the easiest way to get an account all blown off. Low leverage and low margin keeps your trading strategy in check. As a trader matter how good your strategy might appear it won't give you a profitable trade at all times. But with low leverage and low margin keeping it all in check it helps save trades both in losing and winning trades

Yes it uses API to trade. Gunbot has grid strategy as well, you can see my video here. The differences between the two is that you could automate everything to how much is going to be calculated per trade and not needing to know which direction you should pick because it will be determined by indicators already.

It will be easy to setup the APIs to trade. If you purchase Gunbot, you would be automatically enrolled to Gunbot school where you would learn everything about it. It's not that complicated and I would be willing to assist you if you want.

Is Gunbot using API to trade? What’s the difference between Binance Grid Trading strategy to Gunbot? I know Gunbot for a long time but I never try to use it because I don’t how to use an API or the technicalities of it.  Currently doing Grid trading on Binance since it has Neutral, Long and Short position feature that is effective for DCA trading/scalping.

@chipard, That’s the strategy if there’s no trend and you didn’t know the direction of the trend but if there’s a define trend direction, Opening position with fix leverage and margin is better to get huge profit on the trend.

First your title of the topic is misleading as I was looking to see where you will mention stopping lose in your message but it was never mentioned and yet stop-loss appears in your title which is what got my attention in the first place, low leverage is recommended for slow and long liquidation time and that give traders a lot of opportunities to cash in their gains before the liquidation amount is reached, but that can not be said when you set high liquidation the maximum I can go is 2x if not I remain in my 1x and this always gives me peace of mind during trading.

Yes of course. I think you have the right idea to have a lower setting of leverage and have it far away from your liquidation limit. Because if you would be able to do that then you should be able to handle a couple more trades when you are against the thread. You can average your entry price as long as your account can handle it in the right direction. DCA-ing it is going to be okay and that's one of my strategies as well that I use automatically.

It's such a pain to do it manually that's why I use a trading bot like Gunbot. It just makes my life easier and it continues to trade for me 24/7.

high leverage and high margin be main things our account will easy to liquidate, there is no good money management there and only depend on one shoot that must profit, meanwhile market could very volatile only in seconds. putting stop loss in high leverage and high margin will not solve liquidity problem to our account, the correct one as you said use  MM strictly and low leverage.

Taking low leverage is recommended because if you take big leverage, the exchanges usually liquidate you. You might have seen many wicks on the trading chart which are infact the liquidation wicks.
Stoploss placement and low leverage are two seperate things. First you need take low leverage and then place a stoploss, so that if the market moves in oppsoite direction of your trade, you are out of the trade with minimum loss and do not liquidate the account.

I know that lower margin and low leverage are also farther away from the liquidation price, so is it okay to set low margin and low leverage first to avoid losing if your strategy doesn't work, and then add if does the price follow your strategy? Is this also your strategy?