Post
Topic
Board Trading Discussion
Re: 2% trading strategy, can this be applied for crypto trading?
by
Husecomang
on 27/09/2018, 11:20:14 UTC

the 2% rule means you don't risk more than 2% of your account on any one trade. if you have $100k, you don't risk more than $2k at a time. it's definitely applicable to crypto. it's a basic risk management strategy that hedges against variance.

even if your trading system is profitable, you could have a run of bad trades. if you trade 20% of your account at a time, you could blow up your account and lose your shirt after only a handful of trades. the 2% rule allows you to survive an unlucky run, and live to trade another day.


How can it work when earning only 2%? how about fees? or in 2% you already clear up all fees involve in trading and it's 2% gross earning/loss per trading

the opposite approach is the "all in on every trade" method that's so popular with crypto traders. Smiley

I'm sometimes guilty on this with some altcoins. I just set limit, all in and boom. goodbye. next altcoins to trade please.
Grin I can imagine a lot of people may have been in this scenario before getting to learn it is not always the right thing to do. I must say the rate at which people tend to want to look for quick means of earning always make them to always want to go all in on some potential trade.

2% is a normal rule and you can go above that depending on the level of risk you want to take yourself, but usually I tell people that even if you want to take so much risk, do not go more than 5% of your total capital on a single trade as that is high on its own.

Earning is a total different game and you are always going to have to set your own profit level based on certain things you are looking at in the market and that also depends on your pattern of trading as for instance, most day traders, making 2% on a specific trade can be good enough for them.