The essence of position management is capital allocation. How to manage positions?

First, find the right direction. Whether going long or short, it is essential to identify whether the coin has an upward or downward trend over a certain period. For example, using moving averages on minute and hour levels that are either bullish or bearish.

Second, determine the intentions of the operator (market maker or large traders). This is crucial as it basically decides whether to continue upward or reverse. This can mainly be assessed through comparing long and short positions in trading information, comparing active buying inflows, and observing funding rates. For instance, if the funding rate is -0.1%, and the number and positions of short sellers are far greater than those of long buyers, the operator (large long trader) will definitely try to forcefully eliminate the shorts, as the profit is substantial.

Third, position management in buying.

(1) 10%.

Always use only one-tenth of the funds to open positions, as this reduces the risk of liquidation.

(2) 10% of N shares.

For example, if 10% is 100U, then a total of 100 coins of a certain type can be purchased. If the direction is correctly judged, say bullish, buy 10 coins at any price to open a position, then calculate when to buy the remaining 90 coins based on volatility. Buy 10 coins for every certain drop in points, gradually lowering the average cost, so that even a slight increase can break even, and profits can be realized quickly. (This is similar to dollar-cost averaging.)

Fourth, position management in selling.

  1. 5221 principle: If you reach your profit target, first close 50%, then 20%, then 20%, and finally 10%.

The above is the operational technique of position management, and the premise of using it is to judge the trend, which must be the trend under a certain time structure and have continuity.

Next time, I will discuss the method of position management for trading, as the techniques of buying first and selling first differ.

Finally, I wish everyone to avoid liquidation and achieve prosperity.