How to Set a Stop Loss on Coinbase: A Beginner’s Guide

How to Set a Stop Loss on Coinbase: A Beginner’s Guide

Cryptocurrencies
by Julian Lopez-Acosta
282
Cryptocurrency trading can be pretty challenging—often, new traders find themselves losing their minds over order types, settings, tools and trading accounts. There's just so much to learn about the world of cryptocurrency trading, and taking one step at a time can feel like an eternity.
Coinbase logo scratching its head

Coinbase’s robust toolset for experienced traders is perfect for those who want to limit their losses and automate their trading. So what’s the crux of the matter? Setting a stop loss on Coinbase, especially if you’re new to the trading realm, can be intimidating.

So if you’re confused about cryptocurrency trading, and more specifically, using a stop loss on Coinbase, you’ve reached the right corner on the Internet.

In this article, I’ll explain what a stop loss is and how to set a stop loss on Coinbase. All ready?

To set a stop loss on Coinbase, you must:

  1. Switch to Coinbase Pro
  2. Click the Select Market dropdown menu in the top left
  3. Choose the trading pair/market you would like to trade. Ensure you have a balance in both assets.
  4. Select the STOP option under the Order Form panel
  5. Decide between BUY and SELL on top of the order options
  6. Enter the amount of the asset you wish to buy or sell 
  7. Set the price at which you want to trigger the order.

What’s a stop loss?

First and foremost, for those who don’t know the definition or use of a stop loss—stop losses are an order type in stock, cryptocurrency, and other types of trading. 

What does this mean exactly? Well, whenever you purchase or sell a cryptocurrency, there are three categories of order types: market orders, stop orders, and limit orders.

Market orders are the most basic form of buying and selling cryptocurrency. It involves buying or selling an asset immediately at the current price. So, if I saw ETH fell to $900 and wanted to purchase some for a discount, I would use a market order to buy 1 ETH for $900 on the spot. 

Limit and stop orders are relatively similar:

When you place a limit order or stop order, you tell your broker you don’t want the market price (the current price at which a [cryptocurrency] is trading); instead, you want your order to be executed when the [asset’s] price matches a price that you specify.

Christina Majaski, 2022

The difference? Stop losses allow you to buy or sell a cryptocurrency once the price reaches a specified number, known as the stop price. On the other hand, limit orders set a specified price as the least acceptable amount for a transaction to take place. 

In layman’s terms—stop losses are triggered when the asset’s price is met or exceeded. They’re a layer of protection against highly volatile markets, where prices can drop quickly in a matter of seconds.

What is the difference between Coinbase and Coinbase Pro?

Now that you know the definition and use of stop losses, let’s take a look at stop losses on Coinbase.

To set a stop loss on Coinbase, you’ll have to upgrade to Coinbase Pro: the CEX‘s advanced trading platform. The Pro version introduces a new facade to the platform by changing the user interface to fit a professional trading environment with advanced charting.

Users also get the added benefit of additional types of transactions and orders—namely, stop and limit orders. Everything else stays the same aside from a couple of bits here and there.

Is Coinbase Pro free?

Luckily, upgrading isn’t too bad. It’s free, and even the fee structure is restructured to your benefit. The higher the dollar amount of your transactions, the fewer fees you will pay. It’s as simple as that.

How to upgrade to Coinbase Pro

It isn’t necessarily upgrading your account—it’s more like opening a new wallet with Coinbase Pro. Think of it as two separate platforms with shared links between them. 

So, assuming you already have a Coinbase account, all you have to do is click here and hit Sign in on the top right. Make sure you use the same account details as your basic Coinbase account.

Once you’ve logged into Coinbase Pro, you’ll have your Coinbase account automatically linked. You can now transfer funds from your Coinbase wallet into your Coinbase Pro wallet with ease. 

Just a side note: The main difference between your account on Coinbase and Coinbase Pro is the wallet. They both have separate wallets, so you need to transfer fiat or crypto to the Pro wallet if you have some already in the primary Coinbase wallet. 

Once you log in to your Coinbase Pro account, you’ll see this:

Click the Transfer funds button in the banner and enter the required info. It’s that easy.

How do you set a stop loss on Coinbase Pro?

To set a stop loss on Coinbase Pro, follow these steps:

  1. Click the Select Market dropdown menu in the top left
  2. Choose the trading pair/market you would like to trade. Ensure you have a balance in both assets. If you do not, click Deposit in the Wallet Balance panel and add some funds to the respective asset.
  3. Select the STOP option under the Order Form panel
  4. Decide between BUY and SELL on top of the order options
  5. Enter the amount of the asset you wish to buy or sell 
  6. Set the price at which you want to trigger the order. Remember, the Stop Price is the price above the cryptocurrency’s market price, whereas the limit price is the highest price you are willing to pay per cryptocurrency. 

Click the PLACE ‘X’ ORDER in the bottom left.

Does Coinbase have trailing stop loss?

Oh, so you thought stop losses were already difficult enough on their own? Well, if you’ve never heard of a trailing stop loss, you’re in for a treat. 

Trailing stop losses are like your typical stop loss, except they account for a percentage or dollar amount from the current market price. They’re great if you’re a momentum trader, as they’re designed to help you lock in profits and limit losses as long as the price is moving upwards.

If you want to learn more about it, I have a guide just for you.

If you’re keen on integrating trailing stop losses into your strategy, you should avoid Coinbase Pro. Only a handful of exchanges currently support this feature, including Bitfinex and Bitstamp. Coinbase Pro has yet to implement this order type.

Summary

Stop losses are perfect for those who want to minimize their losses without constantly checking the cryptocurrency’s price. Albeit, If you’re a rookie cryptocurrency trader and use Coinbase as your trading platform, stop losses can be a pain to set up. 

To execute a stop loss on Coinbase, check the grey panel on the left of your Coinbase Pro page and ensure you have the correct market selected, a balance in each asset, then click the STOP order and BUY or SELL to activate the stop loss. 

Also, plug in the amounts you want in the Stop Price, Amount, and Limit Price input boxes