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Coinbase Pro is a cryptocurrency exchange market platform which is owned by Coinbase Global, the same company that run the Coinbase exchange platform. Coinbase Pro is a platform which is designed to be used by the active trader. Coinbase Pro does support more cryptocurrencies than Coinbase itself but does feature the same security features. One of the other features that Coinbase Pro offers is the ability to use a stop loss order strategy. But what does this mean and how do you go about doing this?
A stop loss strategy or order is essentially an order that is placed with an agent or a broker with the condition that, if a stock level decreases to a certain amount, the stock can be sold to avoid the investor losing too much money. This gives the investor peace of mind that, if the stock falls below that set price, that the investor only loses the percentage of a stop loss order that they’ve set (for example, if a $50 investment is made with a 10% stop order percentage, if the stock falls below $45, the shares will then be sold at the market price.)
Now that you know what the stop loss order or strategy is, now you need to know how to use it on Coinbase Pro. It is important that you set the right percentage and understand what this means, as doing this incorrectly can cause problems in your trading.
1. Open Coinbase Pro and login. If you’re registered with Coinbase (but not Coinbase Pro), you can opt to register directly with Coinbase Pro using your login credentials and transfer your existing cryptocurrency to your new Coinbase Pro account.
2. To set a stop loss percentage, you need to have at least one purchase in the Fills section at the bottom of your screen – this is what you’ll set the stop loss on.
3. Navigate to the Wallet Balance panel on the left-hand side of your screen.
4. Under Order Form, you’ll need to select Sell.
5. To calculate where to set your stop loss percentage, navigate back over to the main price chart on your screen. This will be set to the pairing currencies (the cryptocurrency that you’ve purchased and the fiat currency you’ve worked with.) As this is a live chart, this will give you an indication of any trading patterns that are occurring.
6. Make a note of the confirmed support figure that is in the chart – you’ll need to set your stop loss at a figure directly below this amount. This is what prevents the losses that can occur.
7. Navigate back over to the Sell section of Order Form on the left-hand side.
8. Click on Stop.
9. There are three fields to calculate – the stop price, amount, and limit price.
10. The amount is the amount of cryptocurrency shares that you would sell (e.g. 50).
11. The stop price is figure mentioned in step 6. This is in fiat currency.
12. Your limit price needs to be close to your stop price but cannot be the same. For example, if your stop price is at $0.23, your limit price could be set to 0.228. If you set this to be the same as your stop price, the stop loss won’t work.
13. Once you have checked all these amounts (and it is important that you do this), click on place sell order. Then a pop-up will appear entitled stop-limit warning – this is a confirmation that you are placing this sell order if the stock level slips to that amount.
14. Click place order.
15. Your limit order has now been set and will be placed under the open orders section of the main screen.
When setting the stop loss strategy, it is important to make sure that you keep track of all trading trends between your two currencies, and the main chart is the best place to do this, as it will help you to calculate the correct stop price figure. Once you have completed all of these steps, you have the added peace of mind that the stop loss will prevent you from incurring big losses, should there be a breakdown in the trade market.
