We recommend usually setting a stop loss on trades at 5%. This ensures you that will not lose more than 5% if the market sees abnormal volatility. The key is picking a stop-loss percentage that allows an asset to fluctuate while preventing as much downside risk as possible. Higher cost assets should use a smaller percentage, while lower cost ones should use a larger percentage. For example, a $3 stock will only be able to swing $0.30 at 10% while a $300 asset is allowed to swing $30. A stop loss of 10% may be a better choice in some scenarios.
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