Topic: 2% trading strategy, can this be applied for crypto trading? - page 3. (Read 563 times)
September 25, 2018, 09:30:45 AM
It is applicable, but only with scale. At first i was investing like a couple hundred bucks, so my trades involved a lot more % of the overall crypto stake.
September 25, 2018, 09:28:17 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 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.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 recommend keeping the % value at about 5% - 7% .
September 25, 2018, 09:01:29 AM
The 2% rule is pointless for long term crypto traders and HODLers.The bitcoin price always moves up and down with +/-5% every day.What if a trader just buys some bitcoins and activates auto stop loss order at 2%?
The 2% rule here just pertains to limiting the maximum lost one can get when trading a pair. It is done by investing only 2% of the capital of the trader but all in all, it is not that different to normal trading thus, it is not pointless for long term crypto traders and holders. In fact, it might be beneficial since they can pick many altcoins that have potential to grow in the future(which means more potential profit). 
September 25, 2018, 07:33:21 AM
The 2% rule is pointless for long term crypto traders and HODLers.The bitcoin price always moves up and down with +/-5% every day.What if a trader just buys some bitcoins and activates auto stop loss order at 2%?I'm pretty sure that the order will be executed after minutes and after that ,the bitcoin price might go up with 10%,which means that he sold automatically at a 2% loss and now he has to manually buy btc at a higher price.
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.
Do you mean 2% for stop loss ? With high volatilitas of crypto, i think that too small percentace in crypto trading, for the better use minimum 3% to 5% for stop loss and take profit minimum 10%. Stop loss 2% can be better to use in stocks trading that has lower volatility than crypto.
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. It is a form of risk management or money management, however you want to see it. If you go all in on a single trade, you set yourself on a higher risk and even when other opportunities arrive to make other trades in some other potential markets, you become incapacitated to get in.
Yes it is applicable and no one is stopping anyone to use that strategy. You can even increase it more since in Crypto, there are times when the price will dip up to 10% then it will start to recover again and continue to go up, so 2% maybe a bit to small as an allowance in-case the market dips. I would set stop loss at 5% or 8%.
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.
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?
It's about position sizing, not take-profit levels. You can take a position worth 2% of your account, then sell at 20% or 200% profit. These are two separate concepts. The 2% rule just limits the amount of capital you can put into a single trade. It doesn't limit how much profit you can make on that trade.
The old guideline still applies: cut your losers early and let your winners run.
Do you mean 2% for stop loss ? With high volatilitas of crypto, i think that too small percentace in crypto trading, for the better use minimum 3% to 5% for stop loss and take profit minimum 10%. Stop loss 2% can be better to use in stocks trading that has lower volatility than crypto.
Stop loss is also a separate (but related) concept.
2% can work. It all depends on the risk vs. reward and your trading style. I trade higher time frames (1-day, 1-week charts) which means I have wide stops, usually wider than 2%.
Do you mean 2% for stop loss ? With high volatilitas of crypto, i think that too small percentace in crypto trading, for the better use minimum 3% to 5% for stop loss and take profit minimum 10%. Stop loss 2% can be better to use in stocks trading that has lower volatility than crypto.
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. 
I'm sometimes guilty on this with some altcoins. I just set limit, all in and boom. goodbye. next altcoins to trade please.
Should be 2% with all the fees on top. If I may add, this strategy is not that aggressive but its not for everyone to apply as well. But one upside of this method is that you will be left with enough capital to stay in the game and live another day. There is also a lot of online trading calculators around, you might want to 'simulate' things first before you go on the actual trade floor.
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.
I'm sometimes guilty on this with some altcoins. I just set limit, all in and boom. goodbye. next altcoins to trade please.
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?
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% 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.
the opposite approach is the "all in on every trade" method that's so popular with crypto traders.
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?
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?
Jump to: