TL;DR- the majority of day traders lose money. All top crypto traders know that using the ‘stop loss’ and ‘take profit’ helps you make the most of your trading. These features are especially useful if you’re using leverage on KuCoin.
If you haven’t already, I heavily recommend getting a hardware wallet like a Ledger Nano to hold your crypto and NFTs! A little bit of spending on security goes a long way in the jungle of a space that crypto is.
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What are stop losses/take profits?
A stop-loss prevents you from losing too much of your investment in a trade.
A take-profit helps you lock in what you’ve already earned on a trade.
Stop Loss Example:
You buy 1 Ethereum at $4500 and set a stop loss for $4300.
The price of Ethereum drops to $3800 the next day.
Instead of losing $700, you only lost $200 because you set a stop loss at $4300- that is, KuCoin sold your Ethereum at $4300 and gave you $4300 of USDT. KuCoin will be cashing you out in Tether (USDT), by the way.
Take Profit Example:
You buy 1 Bitcoin at $63,000. You set a take profit if Bitcoin’s price reaches $65,000.
The next day, Bitcoin briefly goes above $65,000, just before correcting back to $64,000.
Instead of ‘only’ making $1,000 on your trade without a take profit, you made $2,000 because KuCoin sold your Bitcoin at your $65,000 take profit point.
This way, you could make more profit or lose less money without even having to monitor the prices of Bitcoin and Ethereum. Pretty rad, right? Personally, I think stop losses are more useful/consequential than take-profits. My golden rule is not to lose money.
Stop losses and take profits are especially useful when using leverage on your trades. Leverage can get you wrecked (wipe out all your holdings) fast- these tools can help prevent that.
Drawbacks to stop losses and take profits
For the above example, let’s say Ethereum briefly went south of $4,300 before rocketing up to $6,000 in a matter of hours while you were at work. You’d be stuck with your $4,300 while other hodlers would be sitting on the $6,000 Ethereum.
Likewise, Bitcoin blew past $65,000 and went to $100,000. You’d be stuck with your $65,000 while other hodlers would be sitting on $100k bitcoin. It’d be Lambo time for them, but you’d be stuck in an F-150. (I love F-150s, no hate here).
How to set up stop losses and take profits on KuCoin
1. You’ll need to be set up with KuCoin and have your KuCoin account funded.
2. The next step will be to fund your KuCoin Futures account. Go to the Assets Overview homepage after logging in to your KuCoin account. In the middle left of the page, under the Futures Account square, choose Transfer. Fund your futures account using any of your other accounts.
3. On the top bar of the KuCoin homepage, select the derivatives drop-down and choose Futures Pro.
4. Across the top of the Futures Pro homepage, you’ll see the trading pairs. There are currently 60 or so pairs from which to choose. Select the crypto you’d like to short/sell or buy/long.
5. On the right side of the trading window, enter the number of coins you’d like to short or long underneath Amount. Underneath Price, enter the price at which you’d like to buy the coin. I usually go for whatever the price of the coin is immediately at that moment. After entering this amount, you should see the cost of the trade underneath the red ‘sell/short’ or the green ‘buy/long’ button on the bottom right.
6. Once your trade has been completed, you’re now ready to set a stop loss or take profit or both. After refreshing the page, scroll down to the bottom of the KuCoin Futures trading screen and make sure the Positions part of the menu bar is selected. You should see your trade/open position.
7. On the very right side of your open position underneath Take Profit & Stop Loss, you’ll see a ‘-/-‘ text with a pen drawing on a notepad to the right of it. Click on the Pen and Notepad. You’ll be presented with the take profit/stop loss pop-up.
8. Either enter the exact price that the coin will be for you to want to take profit at in the box on the right of the Take Profit (manual) OR select the % profit you’d be satisfied with underneath the text box (faster)- 25%, 50%, 75%, 100%, 150%, 200%. I usually leave the Last Price selection instead of Market Price or Index Price because I haven’t found it to make much of a difference. When you select a %, KuCoin will automatically fill in what price the coin will need to be for the sale.
9. To set a Stop Loss, follow the steps above but for the lower half of the pop-up. This time, these will be the percentages that you want KuCoin to cash you out after losing.
Can you set up stop loss and take profit at the same time?
Yes. Another reason why I love KuCoin. When the screen pops up, fill out both the take profit and stop loss.
How do you calculate profit and loss on your trade?
KuCoin will do this for you underneath the Open Positions banner, where it says Unrealized PNL (profit and loss). It will show you the dollar amount of gain or loss and the percentage.
Careful out there
I’ve been wrecked a couple of times with KuCoin futures, and it’s because I didn’t put in a stop loss. Thank God it wasn’t with anything more than 1-2% of my crypto portfolio. I opened a short on SHIB because I think the project is bullshit. Needless to say, I had my face blown off. Whoops!
If I end up doing a take-profit on a trade and the coin continues to skyrocket, I try not to be too hard on myself- I’m walking away with a profit still. If I get cashed out on a stop loss, I keep paying attention to look for another buying opportunity.
Futures trading is crossing the boundary of investing and getting more into gambling territory. It’s OK to do it, just be honest with yourself if you’re chasing dopamine hits and not steady long-term returns.