# Stop Loss and Take Profit in Crypto: How I Actually Use Them > A stop loss closes a losing trade at a set price, a take profit locks in a gain. Here is where they help, where they fail, and how I manage risk without them. A stop loss is an order that closes your position when the price moves against you to a level you chose, and a take profit is an order that closes it when the price reaches your target. Both turn a risk plan into an automatic exit: the position closes even while you sleep. I trade crypto futures, and in my practice these two orders are one tool of risk management, not risk management itself. > **Key Takeaways** > > - **A stop is a tool, not the plan:** the plan is how much you are ready to lose on a trade; a stop loss is one way to enforce it, isolated margin or a separate wallet with only that amount is another. By my math, at a 1:2 risk-reward ratio a strategy breaks even at a win rate of about 33%. > - **Stops are approximate:** a triggered stop becomes a market order, so slippage and fees make the real loss larger than the planned one, and in crashes far larger. On 12 March 2020 Bitcoin fell more than 50% in a day and about $1 billion of long positions were liquidated on BitMEX in 13 hours. > - **Trade your own plan in Gem Wallet:** Hyperliquid perpetuals trade right in Gem Wallet, with stop loss and take profit on every position. Join the Gem Wallet club with code GEMWALLET and get a trading fee discount. ## What Are Stop Loss and Take Profit? A stop loss and a take profit are exit orders you attach to a position before the market decides for you. The stop loss sits on the losing side of your entry, the take profit on the winning side, and the distance between them and the entry defines your risk-reward ratio. *A stop-loss order is an instruction to close a position at the market once the price reaches a set level.* The idea is older than crypto by more than a century: dictionaries record "stop order" from the 1870s and "stop-loss" from the early 1900s, when brokers on stock exchanges took these instructions from clients by hand. The mechanic has not changed since then: wait, and the moment the price touches the level, sell at whatever the market gives. ## How Stop Loss and Take Profit Came to Crypto In crypto, stop orders became a mass tool together with leverage. For years the market was spot only: you bought a coin, and your "stop" lived in your head. On 13 May 2016 BitMEX launched XBTUSD, the first perpetual swap, with up to 100x leverage and no expiry date, according to the BitMEX announcement. With leverage, an exit order stopped being a convenience and became survival, and in the 2017-2018 cycle stop loss and take profit entered every trader's vocabulary. From my experience, those orders worked as intended for a few years. Somewhere around 2019-2020 the picture changed: more and more of the market became automated, and the long wicks that run through a cluster of stops and come straight back became a regular pattern rather than an accident. Stop hunting existed before, but at that point it became systematic. ## Why a Stop Loss Is Never Exact A stop loss shows the price where your exit starts, not the price where it ends. When the stop triggers, the exchange sends a market order, and that order fills at the prices available at that moment. - **Slippage:** in a fast move the order book is thin, and the fill comes below your stop price. - **Fees:** the exit pays a trading fee on top of the loss. - **Gaps and crashes:** on 12 March 2020, according to the BlockTower market report, Bitcoin fell more than 50% in one day; at one point BitMEX had $200 million of liquidations pending against $20 million of orders in the book. Planned stops filled wherever the price happened to be. The only place where a stop always fills to the cent is a platform that draws its own prices. On a real onchain order book such as Hyperliquid, a stop at -$20 means roughly -$20 plus slippage plus fees. ## Where to Place a Stop Loss A stop loss goes behind the last swing point on the chart, not at a round number. For a long, find the previous swing low and place the stop under it; for a short, find the previous swing high and place the stop above it. - **Measure from the wick, not the body:** the wick is where the price actually traded, so the stop goes beyond the tip of the wick of that swing candle. - **Add a buffer:** I usually add a couple of percent beyond the wick, so that an ordinary retest of the level does not take me out. - **Keep it in your head if you do not place it:** even when I do not put the order on the book, I know where this level is before I enter. ## How I Limit Risk Without Placing a Stop On USDT-margined futures I rarely place a stop loss at all. My stop is the balance: before I open a position, I decide how much I am ready to lose on it, and only that amount backs the position. If the trade goes wrong, the position is liquidated, and the loss is exactly the money I assigned to it, while the rest of the portfolio is untouched. I prefer this for two reasons. First, a resting stop order is visible: the venue, market makers and liquidity providers see where your exit sits, and a level everyone can see is a level that can be hunted. A margin balance is visible too, but it is a far less direct signal of where you will give up. Second, it is simply easier for me to think in money than in price levels: "this trade can cost $100" is a rule I never break. There are two ways to do this: | Method | How it limits the loss | What the market sees | | --- | --- | --- | | Stop-loss order | Closes the position at a chosen price | Your exit level | | Isolated margin | Only the margin of this position can be lost | Your liquidation price | | A separate wallet per trade | Only the balance of that wallet can be lost | The wallet's position, not your other funds | Isolated margin does it inside one account: each position has its own margin and its own liquidation price, while cross margin puts the whole account behind every trade. Why beginners should start with isolated margin is covered in [Top 5 Perps Trading Mistakes on Hyperliquid](https://gemwallet.com/learn/top-5-perps-trading-mistakes-newbies-make-on-hyperliquid-avoid-them/). ## How I Take Profit: The Trend Decides I always have a target in my head when I enter, but I do not exit on a take-profit order. I exit when the trend that I entered on breaks. While the price keeps making higher highs and higher lows in my direction, or simply moves sideways, I hold. The reason is that a fixed take profit in crypto, especially on altcoins, is a guess. The price can stop a couple of percent short of your target and turn, or it can blow through it and add another 100% after you have closed. The trend is the one thing I can see in real time; the target is not. The exception is a clear, strong break. On altcoins I also watch Bitcoin: when the Bitcoin trend weakens, the whole market tends to follow, and that is a reason to close an altcoin long even if its own chart still looks fine. For the ratio itself, I want at least 1:2: the expected gain is twice the money I am ready to lose. *A risk-reward ratio compares the possible loss of a trade with its possible gain.* At 1:2 you need to win only one trade in three to break even before fees: 1 / (1 + 2) ≈ 33%. ## A Real Trade: RUNE, September-October 2026 Here is how this works on a real trade. On 18 September 2026 I saw an uptrend on RUNE, the THORChain token, and went long at $0.53. ![RUNE/USDT daily chart from July to October 2026 with the entry on 18 September and the exit on 13 October](/images/learn/stop-loss-and-take-profit-in-crypto-how-i-actually-use-them-1.webp) *The long was opened at $0.53 as the price broke up from its range above the 20-day EMA, and closed at $0.6415 after the uptrend stalled and the price fell back below the EMA. Source: Binance data, Gem Wallet* The trend carried RUNE to a high of $0.845 on 27 September, about 59% above my entry, according to the Binance daily candles. I closed the position on 13 October at $0.6415, after the price had lost the 20-day EMA: a 21% gain, while about 24% of the move from the high was given back. To be honest, I held this one too long. The trend had stopped making new highs in early October, and that was the moment to close; by the time I acted, a good part of the profit was gone. I keep this example on purpose. Beginners often believe there is a perfect system that buys the exact bottom and sells the exact top, and they chase it. It does not exist. Luck plays a part, experience helps, but in five or ten years of trading I have not seen anyone, myself included, make textbook entries and exits on a chart again and again. A real trade is a good trade with mistakes in it, and the risk plan is what makes those mistakes survivable. Closing a trade does not mean I forget the coin. I keep watching it, and if it pulls back and the trend gives a new entry, I go back in. Sitting on the bench and watching is often cheaper than losing money. ## Common Mistakes With Stop Loss and Take Profit - **No risk plan at all:** you do not have to place a stop order, but you must know, before every trade, how much you are ready to lose on it. Most losses I see start here. - **Believing the stop is exact:** slippage and fees make the real loss bigger than the number on the order, and in a crash much bigger. - **Stops too close to the entry:** a stop inside normal noise gets hit by an ordinary wick, and you pay the loss without the trade ever being wrong. Leverage and shorting, the two things that make these mistakes expensive, deserve their own articles; here it is enough to remember that leverage shrinks the distance between your entry and your liquidation. ## How to Set Stop Loss and Take Profit in Gem Wallet Gem Wallet lets you trade [Hyperliquid perpetuals](https://gemwallet.com/learn/gem-wallet-launches-perpetual-futures-trade-crypto-stocks-and-more-on-hyperliquid/) right in the app, and every position can carry a stop loss and a take profit, with live price, funding and PnL in view. For the balance approach, Gem Wallet lets you create as many wallets as you need in one app. Create one wallet per position, for example "Hyperliquid Bitcoin" and "Hyperliquid Ethereum", and fund each with only the amount you are ready to lose on that trade. Then the worst case of each trade is the balance of its wallet, and one bad trade cannot reach the rest of your funds. If you are new to the platform, start with the [Hyperliquid wallet](https://gemwallet.com/hyperliquid-wallet/) and the [beginner's guide to Hyperliquid](https://gemwallet.com/learn/beginners-guide-to-hyperliquid-trading-platform/).