Well I will not say that is a bad strategy, and that is usually the ultimate goal of any trader: keep their losses low, and profits high. I do believe there could be a problem with this. We all know crypto is very volatile, so isn't it going to be quite easy for his stop loss to be hit, and for his profit taking to not hit?
Let's stay we are trying to get 10% profit and accept a 5% loss. The market goes in our favor, but only 6%. Then it dumps and we not only lose out 6%, but we also hit our stop loss, ending up losing 5%.
I guess this could be solved by using a trailing stop loss. Meaning we accept 5% loss at the point we are at. So if we were in 6% green and the market dumps. Since we only accept a loss of 5% based on our current point, we would end up breaking even because we would actually end up winning 1% on that trade.
Do you have a better solution for this?
see now again this really depends on your trading strategy. for me i do not use any type of indicators, i only use Support / Resistance. so i do apply exactly what you said except the fact that i do not move my SL randomly or based on %. i move it based on either Support/ or Resistance line not just to protect myself from my initial SL.
giving your scenario, but with a different ENDING , say the market moves 6% in your favor and then moves against you and hit your NEW SL which we assume it's break even, and then moves in your initial favor 10% ! so you technically lost 10% in profit.
since we are debating about un-predictable scenario so anybody can support their point view with real numbers.
but let me share something i learned the hard way !. am sure every trader suffered/ suffering from this. how many times you got out of a trade and then it goes up crazily ! and you be like ,, shit i sold and it went up ! if only i waited 5 more mins.
that's why the best strategy for beginners and mid skilled is
" SET AND FORGET" .
this way you avoid getting screwed by emotions, once you get in a trade it should be based on technical reason. so your SL and TP should make sense at the moment of entry , thus no matter how things go you should not touch your SL/TP.
once your eyes become more conftable with charts, you will handle trailing stop better, you would also apply hedging and balancing once needed. but these require fast and solid decision away from emotions, and i do not think it's easy to get rid of emotions!.
i have been doing this for years on forex and now on both crypto and forex and almost every time i temper with my intial decision i fu** up.
