How Setting Take Profit Order in Crypto Trading is beneficial?
The crypto trading market is known for its volatility, creating endless opportunities for buying, selling, and taking profit at the right time. While no one knows any magical formula for timing the market and taking profits out, but there are multiple strategies that a dealer can employ to maximize his gains. If you are thinking of taking profits out of your crypto trading, but don't know how or when to do so because you lack the right strategy, then you should go through this article. From when to sell out your crypto assets to maximize your gains, to learning how to take out profits is fundamental to your trading success.
Take Profit order
Crypto trading is a risky option, but placing the right trade orders can make the difference. And, one such order type is the Take Profit Order which helps traders to earn profits while lessening the risks. This order type is determined up to maximize the short-term profits of the traders on their crypto investments. In this order, a trigger price is required to be set which can be higher than what the dealer paid first. This means, the dealer will always sell the asset with a profit, no matter what is the initial price.
Take profit order is a special type of order which can be used to close the trade with good profits. This is a kind of standing order which is used to sell a crypto asset once it reaches the pre-programmed price. Selling the crypto asset when it reaches this price ensures that the dealer will earn a profit on his trade. This order type is used to lock-in your profits in a long and short position in a variety of ways. Multiple strategies are there which traders can use with your orders like risk-reward proportion, chart pattern, support and resistance, etc.
Take Profit strategies have become prominent among traders who place short-term trades. This order type closes the open position of the dealer for a profit whenever it reaches the predefined value/price of the profit. Setting a take profit order on popular crypto trading platforms like TrailingCrypto allows its traders to place such orders automatically.
Example:
Let's fully grasp this order type with an example:
Mary buys a crypto asset XYZ at $10, 000, and puts take profit value +10% which means, he's got created an order to sell the asset XYZ at a price of $11, 000.
For a time, XYZ has bought and sold within the array of $10, 000, and then continued to grow. Upon reaching the particular level $11, 000 or above, your pending order with take profit +10% will be filled, and the system will close the trade with a sell order.
Here your total profit comes out as $1000.
So, it's a kind of pending order which is used to close a profitable position once it is set to the predefined price. The best crypto trading platform allows its traders to automate the trade using this order type as an exit strategy based on the profit-loss measurements. This order type allows you to minimize the risk and earning profits. Automating the trade utilizing crypto trading bots will execute the orders instantly without tracking the performance personally.
But apart from this order type, there is one more strategy that traders may consider i. e. Trailing take profit.
How take profit order works?
Most regularly the traders utilize this order type in combination with the stop-loss orders so as to limit their losses and maximize their gains on the trade. Take profit orders are also popular as limit order and sell limit orders among the crypto traders. For a buy order, the dealer may set the profit price just underneath the current market price of the asset. And, for the sell order, he needs to set the profit price above the market price of the asset. The profit price can be set in terms of absolute price or percentage depending on the trader's choice.
Another example:
Let's say, a dealer has 1000 coins of any asset ABC purchased at $500 per coin. The dealer believes that its price is going up in a few days, so he will put a take profit order on this which specifies that if the price reaches to $600 per coin, a sell order with a profit will be triggered immediately.
So, this order type allows the traders to limit their risk or experience of the market by exiting the trade as soon as it shows a great take profit crypto bot trading price for them Setting this order type requires good market research and technical analysis of the crypto asset's price/value from the traders along with the considering the movement of the market such as chart pattern analysis, daily or each week pivot point, and average true range.
And, all this is not possible without any kind of expert knowledge. So, you need to watch the changing market trends continuously, but setting up a crypto trading leveling bot will automate your trades and lets you earn profits.
When a dealer must utilize this order?
This order type is best used with the short-term strategy. You may exit the trade as soon as you hit your profit target, without letting your gains slip away and lessening the risks.
So, you can't avoid advanced orders like take profit orders so as to maximize your gains and eliminate losses. This is the best risk management tool as used by all the expert and intermediate traders. One can also use crypto signals given by the best trading platforms and earn smartly.