There are many different ways to manage potential losses, but one of the best ways is through price alerts.
You can receive these alerts, which notify you when bitcoin prices reach a certain level, through several mediums including email, SMS, and push notifications.
How to set price alert for cryptocurrency ?
Some exchanges, including GDAX and Kraken, offer apps that provide these price alerts.
With these notifications, you can receive real-time data without having to constantly monitor the markets, and use this information to decide how best to manage your current trading positions.
If bitcoin prices drop slightly, for example, you may opt to cap your losses by selling your holdings.
However, if the digital currency experiences a sharp drop, you may want to wait out the decline and buy bitcoin at a discount.
Price Alerts vs. Stop-Loss Orders
At this point, you may be wondering why you would want to use price alerts instead of stop-loss orders.
In some situations, the answer is simple.
For example, if bitcoin starts experiencing a flash crash, suffering sharp declines during a short period, stop-loss orders can cause you to sell your bitcoin for less than you originally intended.
Should you decide to set up a stop-market order, and bitcoin ends up experiencing a notable decline, triggering that order can cause your digital currency to sell for notably lower than your stop price.
If bitcoin is trading at $2,000, and you set up a stop-market order that automatically triggers when bitcoin drops to $1,800, a flash crash could cause your market order to fill significantly below that level.
Using a Price Alert
Alternatively, you could use a price alert to navigate a situation like this one.
If bitcoin is valued at $2,000, you could simply set up a price alert that notifies you should the digital currency fall to $1,800.
Once you receive this notification, you can harness it in your trading strategy to either cap your losses or hold out for a buying opportunity.
While price alerts can be quite helpful, keep in mind that bitcoin market are open 24 hours a day.
As a result, you may need to harness a different strategy if you want to cap losses while you are sleeping. In this case, stop-loss orders could be quite helpful.
Summing It Up
Price alerts can facilitate successful trading by providing automated notifications of price movements, which in turn can help you make better-informed decisions.
However, keep in mind that price alerts do have their limitations.
Bitcoin markets are open all the time, and notifications provide limited value if you are not awake to use them. As a result, price alerts may be most effective when combined with other strategies that can work when you are not available to trade.
Since trading strategy can be complex, be sure to conduct your research before investing in bitcoin.
For more valuable information about bitcoin investment strategies, subscribe to Bitcoin Market Journal.