That stop loss rule is risk 2% of your total capital on each position, it's not stop if your stock reduces by 2%.
I like that rule and used to use it in combination with ATR (average true range). It worked well because the ATR adjusted for the volatility of the stock.
That book Trading Secrets explains the combination well.
These days I've just been using stops based on the chart patterns, therefore the stop price is where the share price would have broken the chart pattern in play.
