While browsing investopedia, I read about 2% rule where you will limit your loss to only 2% of your total capital.
Will this be applicable to crypto market? I always believe that you should wait for stock/crypto to gain atleast 20% to lock the profit but the 2% rule seems interesting.
Any insight? Anyone using this strategy?
I would say that stop loss is applicable to crypto but the amount of % that we are applying towards the stop loss totally depends on how much we are risking or how much we can afford to loose. It is well known to everybody that how volatile the crypto market is and within a short duration large fluctuations take place. 2% might just seem a little low and since many coins fluctuate at a higher level on a daily basis. Keeping such a lower value might end up eating your profits as well. For example: the coin went down by 5% resulting in executing your stop loss order and then the price goes up by 10% . You just lost an opportunity of making 5% gains on your investment.
I would recommend keeping the % value at about 5% - 7% .