Turkey’s first globalized cryptocurrency exchange market; THODEX, has announced that it has introduced the Stop Loss service on its platform. Stop Loss is an important finance and trade service that allows users to trade in line with the prices they specified.
This enables users to set what is known as an order limit on their potential trade transactions and enables them to minimize the potential risks involved.
The Turkey-based platform that was founded in 2017 was globalized under the license of FinCen MSB from the U.S. Since then, THODEX has been accelerating operations in multiple locations, integrating new features on its platform to support over 20 cryptocurrency listings on the exchange.
Stop Loss, one of the platform’s newest services provides important insights to help make considerations before purchasing or trading. A Stop Loss order is placed with a broker for a specific stock once it reaches a specific price. It is designed to cap an investor’s losses on a security position.
However, even a short-term price fluctuation may at once activate the stop on an order and trigger an unnecessary sale. Hence, it is vital to use Stop Loss appropriately to maximize its advantages.
For example, assuming BTC price in the market as $30,250 and a user has 1 BTC on their THODEX account. It can be analyzed and predicted that BTC price may not fall under $29,000.
Hence, the investor can set a stop sell order price at $29,000 for the BTC owned to protect their asset. Similarly, as a stop loss buy order, the same BTC market price can be assumed for $100,000 in a user’s account. It is expected that BTC price will rise up to $30,800, and hence a stop buy order can be set at that price to avoid missing out on price movement.
The most important advantage of using the Stop Loss service is that it costs nothing to implement. Similar to a free insurance policy, a regular commission on the trade is applied only when the stop loss price is activated and the stock is successfully sold or bought.
In addition, the concept of stop-loss also enables investors and traders to make decisions solely based on analysis and predictions, without any emotional influence. However, this also means that stop-loss does not guarantee money-making in the stock market. In fact, it all the more bases success on intelligent investment decisions and market predictions.
As stop-loss settings can be canceled and changed dynamically, these decisions are vastly made easier.
While there are distinct benefits of the Stop Loss service in trading, there are a few disadvantages as well; the main one being its effect on short-term stock price fluctuation. In this case, the strategy should be picking a stop-loss percentage that allows daily price fluctuation.
For example, for a stock that has a history of fluctuating more than 10% or more in a matter of days, the stop loss percentage should be set higher than an average of the fluctuation percentage.
Another aspect worth noting for fast-moving markets where stock prices change rapidly is that once the stop price is reached, the stop order becomes a market order. Hence, the selling price may become much different than the stop price.
In essence, Stop Loss is a simple tool that only requires effective and smart usage to prevent losses and lock profits.
Its introduction on THODEX continues the evolution of the crypto-sphere in Turkey, with the platform earlier having introduced the country’s first Bitcoin ATM in Nisantasi, Istanbul in 2018.
The Stop Loss service on the platform provides much-needed insurance to crypto investors. To use it against BTC, the “stop-limit” tab on the THODEX account can be used to set BTC amount to be sold and stopped.