What is Stop-loss?
An order that triggers a sale when price falls to a set level — a pre-commitment to cut losses before emotions vote. In fast crypto moves, fills can land well below the trigger.
A stop-loss is a pre-commitment: an order that triggers a sale if price falls to a level you chose in advance — cutting a loss while it's small, with the decision made by yesterday's calm self rather than tonight's panicking one. In a market that moves 24/7 while you sleep, that automation is the honest appeal.
Crypto adds two sharp caveats. First, when a stop triggers it typically becomes a market order — in a fast crash the fill can land well below your trigger, especially in thin coins. Second, crypto's routine ±5% wicks hunt tight stops: set close to the price, a stop converts ordinary volatility into a realised loss and a missed recovery. Note for Australians: a triggered stop is a disposal — a CGT event — like any other sale.
See it in practice
Related terms: Market order · Leverage · full glossary
FAQ
Where should I set a stop-loss?
Below the level where your investment thesis is wrong, not at a pain threshold — and wide enough that routine volatility doesn't trigger it. If normal daily moves are ±5%, a 3% stop isn't risk management; it's a donation schedule.
Do long-term holders need stop-losses?
Many deliberately don't use them — accepting drawdowns as the cost of position and avoiding wick-triggered exits. The alternative discipline is position sizing: holding only what you can watch fall 70% without needing an automated escape.
General information only, not financial advice. Definitions are maintained in our fact database and reviewed with the daily rebuild.