A Beginner’s Guide to Stop-Loss and Take-Profit Orders

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Last updated on September 8th, 2025 at 10:33 am

Crypto trading can be exciting and profitable, but it’s also highly volatile. Prices can swing dramatically in minutes, which means you can lose money just as quickly as you can make it. That’s why risk management is crucial, especially for beginners.

One of the best ways to protect your investment and lock in profits is by using stop-loss and take-profit orders. These tools help you set clear exit points for your trades, so your emotions don’t get in the way when the market moves fast.

This guide will break down what stop-loss and take-profit orders are, how they work, and how you can use them to trade smarter and more confidently in the crypto market.

What Is a Stop-Loss Order?

A stop-loss order is a tool that automatically sells your crypto when its price drops to a specific level that you choose. It’s designed to protect you from losing too much money if the market moves against you. It’s like setting a floor; once the price falls to that level, your crypto is sold to prevent further losses.

Since crypto markets can be unpredictable and highly volatile, a stop-loss order helps limit your downside by taking emotion out of the equation and making sure your losses don’t get out of hand.

For example, if you buy ETH at $2,000 and set a stop-loss at $1,800. If ETH’s price drops to $1,800, the stop-loss order will automatically sell your ETH. This helps you avoid deeper losses if the price continues to fall.

What Is a Take-Profit Order?

A take-profit order is a type of crypto trading tool that automatically sells your crypto once the price reaches a certain profit level that you’ve set. It helps you lock in gains before the market has a chance to reverse. It’s like setting a ceiling; once the price hits that target, your trade closes, and your profit is secured.

Since crypto prices can spike and drop quickly, a take-profit order ensures you don’t miss out on gains by getting too greedy or waiting too long. It removes emotion from the decision and helps you stick to a crypto trading plan.

For example, if you buy Bitcoin at $60,000 and set a take-profit at $65,000. If BTC rises to $65,000, your take-profit order will automatically sell your Bitcoin, locking in a $5,000 gain, without you having to watch the market all day.

How These Tools Work Together

Stop-loss and take-profit orders are most potent when used together. They allow you to automate your exit strategy, whether the market moves up or down, so you don’t have to constantly monitor your trades or make emotional decisions in the heat of the moment.

By setting both a stop-loss and a take-profit, you’re defining a clear range for how much you’re willing to lose and how much you hope to gain. This creates a structured approach to crypto trading and helps protect both your capital and your profits.

Everyone has different comfort levels with risk. That’s why it’s important to set your stop-loss and take-profit levels based on your personal risk management and tolerance and financial goals. A conservative crypto trader might use tighter levels, while a more aggressive one may allow for wider swings.

Let’s say you buy a cryptocurrency at $100.

You set a stop-loss at $90 (a 10% loss)
You set a take-profit at $115 (a 15% gain)

If the price drops to $90, the stop-loss will kick in and limit your loss. If it rises to $115, the take-profit will trigger and lock in your gains. Either way, you’ve protected yourself and made the trade based on a plan, not guesswork.

How to Set These Orders on Popular Platforms

Placing stop-loss and take-profit orders is pretty simple once you know where to look. Here’s a quick overview of how to set them up on Binance, Coinbase, and Kraken.

Binance

Go to the “Trade” tab and select Spot or Futures, depending on where you’re trading.
Choose the crypto pair you want to trade (e.g., BTC/USDT).
Under the order form, select “Stop-Limit” or “OCO” (One-Cancels-the-Other).
- Stop-Limit: You enter a stop price (the trigger) and a limit price (the price you want to sell at).
- OCO: Lets you set both a stop-loss and a take-profit in one order.
Enter your stop-loss and/or take-profit prices, then click Buy/Sell to place the order.

Coinbase (Advanced Trade)

Use Coinbase Advanced Trade (not the basic app), which allows more control over orders.
On the crypto trading interface, select the crypto pair and go to “Limit” or “Stop” orders.
For a stop-loss:
- Choose “Stop Order”
- Enter the stop price and the amount of crypto to sell
For a take-profit, use a “Limit Order” to sell at your target price.
Place the order and confirm.

The regular Coinbase app doesn’t support advanced orders like stop-loss or take-profit. You’ll need to use the desktop site or Advanced Trade.

Kraken

Log in and go to “Trade”, then click on “New Order”.
Choose “Advanced” to access more order types.
For a stop-loss:
- Select “Stop Loss” as the order type.
- Set your stop price and the amount to sell.
For a take-profit:
- Select “Take Profit” as the order type.
- Enter the target price where you want to sell.
Submit your order to activate it.

Kraken also supports conditional combo orders, allowing you to place stop-loss and take-profit orders together.

Common Mistakes to Avoid

Stop-loss and take-profit orders are powerful tools for managing your crypto trades, but they must be used wisely. Here are some common mistakes new traders often make, and why they matter:

Setting Stop-Losses Too Tight in Volatile Markets

Crypto prices can fluctuate quickly, even within minutes. If you place your stop-loss too close to your buying price, you might get kicked out of a trade because of normal market noise, not because your trade idea was wrong.

This can lead to frustration when the price bounces back right after your order is triggered. It’s important to leave enough space for the asset to move naturally without triggering an unnecessary exit.

Forgetting to Adjust Levels as the Market Moves

Markets are constantly changing, and your strategy should, likewise, change with them. If you set a stop-loss or take-profit and then forget about it, you could miss a chance to reduce risk or lock in more gains.

For example, if your trade is in profit, you should move your stop-loss higher to protect some of that profit. Failing to adjust your levels means you’re not responding to the current market reality, which can result in financial losses.

Ignoring Market Trends and Blindly Setting Arbitrary Numbers

Some traders pick random numbers for their stop-loss or take-profit targets without looking at the overall market trend or technical indicators. This approach is risky because it doesn’t take into account how the asset is actually behaving.

Setting levels without a reason, like choosing -10% or +20% just because it “sounds good,” often leads to poor results and missed opportunities.

Failing to Use These Tools Altogether

Not using stop-loss or take-profit orders is like driving without brakes or a destination. If the market moves against you, you might end up with large losses before you even realize what’s happening.

If the market goes in your favour but reverses before you take profits, you could lose gains you otherwise would have secured. Having these orders in place creates a safety net and keeps your emotions out of the decision-making process.

Final Tips for Smart Usage

Stop-loss and take-profit orders can help you trade more confidently, but using them wisely is key. Here are a few smart tips to get the most out of these tools:

Combine with Technical Analysis or Indicators

Don’t just guess where to place your stop-loss or take-profit orders. Use basic technical tools like support and resistance levels, trend lines, or moving averages.

For example, setting a stop-loss just below a known support level can help you avoid getting stopped out during normal price swings. Placing a take-profit just before a major resistance level can help you exit a trade before a possible reversal.

Review and Adjust Your Orders as the Market Evolves

Markets don’t stand still, and neither should your trading plan. As prices move, trends change, or news breaks, check on your open positions and adjust your stop-loss and take-profit levels if needed.

This helps protect your profits or improve risk management as the situation changes. For example, if your trade is up 10%, you might decide to move your stop-loss up to your entry price, so even if the market turns, you don’t lose money.

Use Demo Accounts to Practice First

Before risking your real money, it’s a good idea to practice using stop-loss and take-profit orders on a demo account. Most major exchanges offer this option. Demo crypto trading helps you get comfortable with how the tools work and how to react to different market situations, without any financial risk.

Final Thoughts

Stop-loss and take-profit orders are simple but powerful tools that help you manage risk and protect your profits in crypto trading. For beginners, using these orders is a smart way to avoid emotional decisions and stick to a clear plan.

Start by experimenting with small amounts, learn how the tools work in real market conditions, and build your confidence over time. As you gain more experience, you can explore advanced features like trailing stop orders to improve your strategy even further.

Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.

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