As a KOL who has been in the cryptocurrency market for many years, I have seen countless people go to zero overnight due to blind investment, and I have also witnessed a few achieve financial freedom through scientific position management. Today, I will reveal how position management can become the underlying code for high returns, combining practical experience and industry fundamentals.
I. The core logic of position management: Balancing risk and return.
Position management is essentially a game of probabilities, with its core being to seek certainty amid unpredictable market fluctuations through capital allocation strategies. Unlike traditional investments, the cryptocurrency market's features of 24-hour high volatility, high leverage, and high risk make the importance of position management far exceed technical analysis.
Three core principles must be ingrained in your DNA:
1. Never go all-in: Always keep at least 30% cash to deal with black swans; the bullets for bottom fishing in bear markets and taking profits in bull markets come from here.
2. Batch operations: Use the 'ant moving house' strategy to dilute costs, avoiding total losses caused by single-point decision-making errors.
3. Dynamic adjustment: Switch strategies based on market strength, use pyramid for main upward trends in bull markets, and funnel-type bottom fishing in bear markets.
II. Five major practical strategies: Path from bronze to king.
1. Survival rule for volatile markets - rectangular position method.
Divide funds into 5-10 equal parts, building positions equally each time. For example, with 100,000 principal divided into 10 entries, increase position by 10,000 for each 5% drop. This strategy avoids emotional interference through mechanical discipline, suitable for Bitcoin's sideways period or altcoin's volatile market.
2. Left-side trading artifact - funnel-type bottom fishing method.
Increase positions in batches at ratios of 10%-15%-20%-25%-30%, specifically treating the 'heavy investment on the first drop' syndrome. For example, with BTC at the current price of 65,000, the first position is 10%, and increase proportionally with every 10% drop. Note that the gap should be at least 10% to prevent depleting ammunition too early.
3. Bull market printing machine - pyramid position increase method.
Initial heavy position of 50%, reduce position by 10% for every 10% increase (30%-20%). During the bull market in 2021, this strategy allowed early heavy position holders of ETH to enjoy an 80% increase. The key is to set a dynamic profit-taking line, moving the stop-loss level up after breaking previous highs.
4. Ultimate plan to prevent liquidation in contracts.
Leverage controlled within 10 times, using the liquidation line formula: Leverage ratio = 1 / (maximum estimated drop × 1.5)
Adopt a separate position model to isolate risks, with each order's stop loss not exceeding 5% of the principal.
Immediately withdraw capital when profits exceed 20% and continue to play with profits.
5. Maximize capital efficiency with a combination punch.
50% mainstream coins (BTC/ETH) held long-term with rectangular method.
30% potential altcoins using funnel-type left-side ambush.
10% contract position pyramid to chase trends.
10% stablecoins earning interest (Binance USDT savings at 2.85%) as a safety cushion.
III. Lessons learned: Fatal details overlooked by 90% of people.
1. The quantitative art of stop loss and take profit.
Cut losses beyond 10%, and reduce positions by at least 50% when profits reach 20%.
Use the EMA moving average system: Reduce position by 30% when price breaks MA10, clear all when it breaks MA30.
2. The formula for matching position and cycle.
Short-term (intraday): ≤20% position, stop loss 3%
Medium-term (weekly): ≤50% position, stop loss 8%
Long-term (monthly): ≤70% position, stop loss 15%
3. Emotional management as a dimensional reduction strike.
Establish a 'calm account': Transfer part of profits to a cold wallet after exceeding 50% profit to avoid FOMO psychology leading to profit reversal. In 2024, I used this method to preserve 85% of my profits during the SHIB surge.
IV. Ultimate advice for beginners
1. Refuse the ALL IN temptation: All-in players are essentially gamblers; in the 2023 LUNA incident, 97% of liquidated accounts were all-in contracts.
2. Stay away from 'insider information': The so-called hundredfold coin groups are 90% scams; independent research is the way out.
3. Regular withdrawal rule: Withdraw 30% of profits every quarter; realizing profits is true profitability.
There is no holy grail in the cryptocurrency market, but scientific position management can increase your survival probability by tenfold. Remember: Bull markets test returns, while bear markets test survival rates. When you control risk with position management, time will naturally become your ally.