One of the keys to trading is risk management and to do that you need to first define your risk which is done by using stop losses. 

As for how to do it, well, the idea is simple enough.  You place the stop at a price where your trade is in failure, as for how to know what that pointiis that's up to you and the system you employ.   

The other thing to consider with stop losses is that you need to manage them (or not) while you're in the trade. So if you're long bitcoin @ 5200 and it bumps to 6800, you may want to move your stop in to protect your profit . .  or take some profits off the table and let it run. . . or both.

There's a stop strategy out there I found useful in *some* trending markets called the chandelier stop. 

Here's an article on it:

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:chandelier_exit

Enjoy!