What percentage should you set a stop-loss?

Setting a stop-loss is a crucial aspect of trading cryptocurrencies, as it helps limit potential losses in case the market moves against your position. However, the question of what percentage to set for a stop-loss is not a straightforward one, as it depends on various factors such as your risk tolerance, trading strategy, and the current market conditions. One common approach is to set a stop-loss at a level that would limit your potential loss to a certain percentage of your overall investment, such as 2% or 5%. This allows you to predefine the maximum amount you are willing to lose on a given trade, which can help prevent emotional decision-making and maintain discipline in your trading. However, it's important to note that setting a stop-loss too close to your entry price can result in being stopped out of a trade prematurely, particularly if the market experiences a temporary dip or fluctuation. On the other hand, setting a stop-loss too far away can increase your potential losses if the market moves significantly against your position. Ultimately, the percentage you set for a stop-loss should be based on your individual risk tolerance and trading strategy. It's important to thoroughly test and refine your stop-loss levels in a simulated trading environment before applying them to real-world trades. This can help you determine the optimal level that balances the need to limit potential losses with the potential for profit.