2% trading strategy, can this be applied for crypto trading? - page 2.

jvdp

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Quote from: wahyu wida on September 26, 2018, 10:25:49 PM

Quote from: criz2fer on September 26, 2018, 07:15:42 PM

Any strategy can be use, just set a target before selling. Unlike in stock, crypto is very volatile and you can gain not only 2% but up to 200% as I have said, it would depend in your target selling.

2% is a realistic number to achieve. it does not make us greedy, and still have regular psychology. Every trader has a different trading style, so self discipline is the key to success

If the percentage of the investment will be give less risk? How do you find the analysis in such way. If the investment amount is more than 30k in 2 percentage means will it be work correct.
However the lose is lose guys.

I do not think this strategy will work for long term and sometimes it goes correct.

lordmick

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Quote from: flying_bit on September 25, 2018, 12:00:33 AM

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 think that this rule is more applicable to forex. However, in the market of cryptocurrencies, you can apply this rule by slightly changing it. For example, as a rule, I open a position for an amount not exceeding 5% of the total amount of the deposit and set the stop loss not more than 10% of the open position.

spiker777

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2% is definitely a fair stop loss I would say, but in the world of crypto, you can expect to sell out on your stop loss very frequently, as 2% movement in a day is almost guaranteed, unlike the world of forex. When times are particularly haphazard you might want to increase this to 5% as +/- 5% in a day really isn't that unusual, especially for smaller volume coins.

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Quote from: xuan87 on September 26, 2018, 08:53:10 PM

Well it depends on yourself, it can be a good strategy to put a 2% stop lost, for me it's not too suitable,the reason is because crypto got a high volatility the 2% of lost can be easily happen and the bounce back again,it maybe a good strategy for stock but for crypto maybe the stop lost is too near

Same with my understanding and personal experience, 2% can be happen in a blink of an eye inside crypto market, you loses right away and bouncing back much stronger won't let you recover but gained regrets, I guess there's a strict needs of practices before we can stick with any strategy that we have
read, experience will allow us to be more flexible and always ready to change pace whenever things is not working according to our plans.

withlove99

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Quote from: flying_bit on September 25, 2018, 12:00:33 AM

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?

2% rule can be used in transactions cryptocurrency, It is a capital management method that helps us control the risk when trading.
The problem is that we must apply disciplined and flexible with all the methods that we know

ringgo96

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Quote from: wahyu wida on September 26, 2018, 10:25:49 PM

Quote from: criz2fer on September 26, 2018, 07:15:42 PM

Any strategy can be use, just set a target before selling. Unlike in stock, crypto is very volatile and you can gain not only 2% but up to 200% as I have said, it would depend in your target selling.

2% is a realistic number to achieve. it does not make us greedy, and still have regular psychology. Every trader has a different trading style, so self discipline is the key to success

targeting 2% profit is actually easy to practice because indeed for now we can follow the many suggestions that are here as a preference for us to trade

Husecomang

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Quote from: flying_bit on September 25, 2018, 03:10:22 AM

Quote from: figmentofmyass on September 25, 2018, 01:50:19 AM

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

Quote from: figmentofmyass on September 25, 2018, 01:50:19 AM

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

I'm sometimes guilty on this with some altcoins. I just set limit, all in and boom. goodbye. next altcoins to trade please.

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.

wahyu wida

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Quote from: criz2fer on September 26, 2018, 07:15:42 PM

Any strategy can be use, just set a target before selling. Unlike in stock, crypto is very volatile and you can gain not only 2% but up to 200% as I have said, it would depend in your target selling.

2% is a realistic number to achieve. it does not make us greedy, and still have regular psychology. Every trader has a different trading style, so self discipline is the key to success

xuan87

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Well it depends on yourself, it can be a good strategy to put a 2% stop lost, for me it's not too suitable,the reason is because crypto got a high volatility the 2% of lost can be easily happen and the bounce back again,it maybe a good strategy for stock but for crypto maybe the stop lost is too near

Bitcoinstein

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We as people, have different financial goals and experiencing different situations.
Some are looking for high risks, the others for stability.

Any plan - is a plan, it is not the right place to get a financial advise neither.
It all depends on you and your status. If you are looking to build long-term wealth or speculating on short-term earning.

In my personal opinion, the 2% rule is applied more for traditional markets, when volatility is low.

You've chosen to adopt a young technology, that it is still developed.
It is like your 5 years old son is making a mess and painting the walls, and you are willing to send him directly to a psycho-treatment.
Don't cut the wings so fast, maybe it will be an art Wink

criz2fer

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Any strategy can be use, just set a target before selling. Unlike in stock, crypto is very volatile and you can gain not only 2% but up to 200% as I have said, it would depend in your target selling.

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Quote from: CryptoAssasin on September 25, 2018, 07:23:48 AM

It looks effective but i am wondering how will that work. If i have $100 to invest then 2% would be $2. If i invest again the remaining $98 and i lost another 2% which is $1.96 then my remaining fund is $96.04. Well, not bad actually. It somehow save me $0.04 because if i let that 4% deducted to my $100 in one transaction, i lost $4 instead of $3.96 if i use the 2% rule. I confirmed that it will minimize the risk specially for those traders with big amount of money to trade.

The 2% rule is basically a money management strategy not to order a particular trade that will see our accounts in red whether big or small account.

Quote from: Oilacris on September 26, 2018, 05:53:58 PM

2% rule would be good in using it up either on forex or stocks but those kind of stop losses wont really work anytime here on crypto yet price can swing into higher percentage which would really trigger that SL so easily.Even on having 10% would still be on danger.

Yes but sometimes we really should not feel bad when the stop-loss is logged out. What would have happened to our account if the SL was not there?

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Quote from: flying_bit on September 25, 2018, 12:00:33 AM

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?

If the exchanger have stop loss limit, that strategy might be can applied. But if don't we wouldn't have time to only stay to look market or maybe some pump and dump happen instantly.

Oilacris

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Quote from: flying_bit on September 25, 2018, 12:00:33 AM

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?

First of all I would like to say about stocks and crypto wont really be the same thing since both fields do really have different volatility when it comes to their prices. 2% rule would be good in using it up either on forex or stocks but those kind of stop losses wont really work anytime here on crypto yet price can swing into higher percentage which would really trigger that SL so easily.Even on having 10% would still be on danger.

Jambo tape

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and this is what I apply when trading, taking profit not more than 1-2% in a day
because what we face are various kinds of risks, kerugia, losing a lot of time and other things

99subsats

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Quote from: flying_bit on September 25, 2018, 12:00:33 AM

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?

The 2% is a good trading tricks i will say. Even the popular trading platform will not only advice on risk management but also caution you to invest 1% while trading. The best is always "invest fund you can lose" to avoid heartache.

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Quote from: CryptoAssasin on September 25, 2018, 07:23:48 AM

It looks effective but i am wondering how will that work. If i have $100 to invest then 2% would be $2. If i invest again the remaining $98 and i lost another 2% which is $1.96 then my remaining fund is $96.04. Well, not bad actually. It somehow save me $0.04 because if i let that 4% deducted to my $100 in one transaction, i lost $4 instead of $3.96 if i use the 2% rule. I confirmed that it will minimize the risk specially for those traders with big amount of money to trade.

Great analysis mate! That made me realized that this the 2% rule is very effective and made me shake my head while smiling. I also do the math with my funds I trade at Binance and this thread enlightens me what is missing and why I lost a huge amount already. If I just use this strategy from the beginning, I may save some of those money I lost and minimize my greediness or maybe poor analysis.

Quote from: flying_bit on September 25, 2018, 12:00:33 AM

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.

I will try to use this method next time and will always keep this in mind. Thank you so much for sharing this! I just found the article and saved already on my bookmarks.

https://www.investopedia.com/terms/t/two-percent-rule.asp

pundit

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Quote from: flying_bit on September 25, 2018, 12:00:33 AM

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?

2% rule is applied for traders who do not want to take much risk which is a good plan in trading but at the same time rewards will be less, if you want to keep SL at the lower leven then your position should be lesser if you take big position then 2% risk can be covered at a nearby price which may easily be hit, for lower position you profit will also be less.

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Quote from: haroldtee on September 25, 2018, 07:08:55 AM

You are getting yourself confused, it is not about earning 2% on each trade, it is about not entering a position with more than 2% of the total capital you have. I believe that should be explanatory enough for anyone. This would always make it easy for you to make trades without having to worry about how much impact it would have on your general holding as the case may be.

you mean if you have $2000, you will only trade $40 each day stock? okay, that makes sense.

Quote from: pawanjain

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% .

I'm also thinking this but for me acceptable gain is 20% . I'm more of swing trader /long term holder. I try to catch crypto at low price and only start to sell when I see that it's on 20% gain but the rule of 2% makes sense though I think this is more applicable for day trader.

Quote from: CryptoAssasin

It looks effective but i am wondering how will that work. If i have $100 to invest then 2% would be $2. If i invest again the remaining $98 and i lost another 2% which is $1.96 then my remaining fund is $96.04. Well, not bad actually. It somehow save me $0.04 because if i let that 4% deducted to my $100 in one transaction, i lost $4 instead of $3.96 if i use the 2% rule. I confirmed that it will minimize the risk specially for those traders with big amount of money to trade.

Yes, base on the above explanation I think this is how it works.

Shishir99

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It is very popular risk management strategy. Obviously it is applicable to cryptocurrency also.
By this method you can minimise your risk and make good profit in trading.But if you hold a long term valuable potential coin then it might not apply to it.

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