As the name suggests, a stop-loss order is an automated order to close the positions to limit the losses. It can also be used to limit the gains in a trade. Since a stop-loss order limits the loss or gains, it is placed against the anticipated direction.
When a trader goes long on a cryptocurrency, the stop-loss order is placed below the entry (buy) price. For instance, if a trader buys BTC/USD at $9,000, the initial stop-loss is placed below $9,000.
On the flip side, if a trader shorts a crypto pair, the typical stop-loss is placed above the entry (sell) price. For instance, if a trader shorts BTC/USD at $9,000, the stop-loss is placed above the $9,000 mark.