1. What is Stop Loss and Take Profit?

Stop Loss (SL) and Take Profit (TP) are essential risk management tools in crypto trading. SL automatically sells when price drops to limit losses, while TP locks in profits by selling when price reaches a target level.

2. How Does the Calculator Work?

The calculator uses these simple formulas:

Where:

• \( Today's\ Price \) — Current price of the cryptocurrency
• \( Volatility \) — Expected downward price movement
• \( Target \) — Desired upward price movement

Explanation: The calculator helps determine optimal exit points based on your risk tolerance and profit goals.

3. Importance of SL/TP in Crypto Trading

Details: Proper SL/TP settings protect against extreme volatility in crypto markets and help maintain trading discipline by removing emotion from decisions.

4. Using the Calculator

Tips: Enter current price in USD, expected volatility (how much you're willing to lose), and target profit. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I determine volatility?
A: Analyze historical price movements or use indicators like ATR (Average True Range) to estimate typical volatility.

Q2: Should SL/TP be percentage or fixed amount?
A: This calculator uses fixed amounts, but many traders prefer percentages (e.g., 2% loss limit). Adjust accordingly.

Q3: How often should I update SL/TP?
A: Regularly, especially after significant price movements or news events that change market conditions.

Q4: Are there limitations to fixed SL/TP?
A: Yes, in highly volatile markets, prices may gap through your SL/TP levels. Consider trailing stops for better protection.

Q5: Should I always use SL/TP?
A: While highly recommended, some long-term investors may choose not to use them. Always have a risk management plan.