In a nutshell: No matter how much your margin is, whether it's one thousand, two thousand, or five thousand, a 10x long position will be liquidated if the price drops by 10%, and a 10x short position will be liquidated if the price rises by 10%; a 5x long position will be liquidated if the price drops by 20%, and a 5x short position will be liquidated if the price rises by 20%.
🧐 Its value is the same, but the liquidation price will be different. If you have a principal of 10,000, with 1,000 at 10x you have ten opening opportunities, while with 2,000 at 5x you only have five opening opportunities. The value gain is the same; which one would you choose?
🌟🌟 In the 👃🏻 circle, if you manage your positions well, you will outperform the vast majority of people.
‼️ Position management refers to a specific plan you set for opening, adding, reducing, and clearing positions when you decide to trade cryptocurrencies. Good position management is one of our important means to avoid risks and can minimize losses and maximize profits!!
‼️ How should positions be managed? Is there a standard? Many traders fail, and one of the key reasons is that they treat market analysis as the entirety of trading, as if analyzing the market is enough to determine success or failure. In fact, market analysis is just the most basic work; what really determines success or failure is the work done after the market analysis, which are the considerations after you enter the market.
Position management includes capital management and risk control. More importantly, it involves when to add positions, how much to add, where to reduce positions, and how much to reduce.
The complete trading process should be:
1️⃣. Market analysis, you can use any technical analysis.
2️⃣. Position management, after entering the market, you need to consider what might happen next: what to do with profits, whether to add positions, take profits and exit, or continue holding. If there are losses, should there be a stop-loss, hold the position, or partially exit first? How much loss would require a complete exit.
3️⃣. Strictly execute the trade. Once your plan is clear, you must begin implementation without being disturbed by market fluctuations.
4️⃣. Summarize the trade. After completing a trade, you need to review it along with previous trades over a period of time. The review samples should span three market conditions: uptrend, downtrend, and sideways. When the market is above the support line, the trend is upward; when the market breaks below the support line, the trend is downward. More importantly, the support line is also our basis for defining potential risks. When stop-losses are placed below this support line, the potential risk range is determined.
✔️ Conversely, the potential profit range is above the support line, and the upward trend of the market has not ended, so theoretically, the potential profit is unlimited. After entering the market with an upward trend, we can hold the original position or gradually increase our position based on the original one. We will move the stop-loss according to market changes.
✔️ When the price rises again to a new support or resistance level and then starts to decline, the area below this support or resistance level becomes the reduction area, and we should gradually liquidate all positions.
🔥 To summarize: First, we need to find a support and resistance line at the cost price. When the price rises far from the cost line, we gradually add positions, and the addition must be decreasing. When the price drops further from the cost line, we gradually reduce positions, which must also be decreasing. Your position management technique must balance risk and profit.
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