Investment tips: Position management
A core skill that can help you avoid getting hit and eat well - position management
Why is position management more important than selecting cryptocurrencies?
Position management is like driving
Fully invested = stepping on the gas: Fast but easy to crash
Empty position = constantly hitting the brakes: Safe but never reaching the destination
Correct posture: Charge when necessary (increase position when the trend is clear), stop when necessary (reduce position when risks are high)
Three core values of position management
Prevent black swan events: For sudden negative policies, those who control their positions can average down at lower prices, while those fully invested can only lay flat
Leave some bullets to pick up bargains: When prices plummet, while others panic, you buy the dip
Maintain a stable mindset: When lightly invested, watching K-line charts feels like watching a series; when heavily invested, it feels like watching a horror movie
3 practical position rules
Rule 1: Manage your position, buy in batches like grocery shopping
Wrong operation: Buying 800,000 shares for 1000 units, without funds to average down when it drops, just staring at it.
Correct operation:
Buy 30 units with 1000 yuan (3% position)
Continue to average down until it reaches a reasonable level, up to 50 units (increasing position to 5%)
Even at lower positions, you can continue to average down 80 units (total position to 8%)
Effect: Reduce cost from 10 units to 7 units, making a profit when rebounding to 8 units
Rule 2: Don’t be greedy after a rise, sell more as it rises like selling watermelons
Scenario: You bought a coin at 10 units, and it rises to 15 units
Stupid method: Hold on until it rises to 20 units, but it drops back to 12 units
Smart operation:
Sell 1/3 at 13 units (recover capital)
Sell 1/3 at 15 units (lock in some profits)
Let the remaining 1/3 of profits run (even if it drops, don’t feel bad)
Rule 3: Don't put all your eggs in one basket, but don't have 10 baskets either
Counterexample:
Buy 5 AI sector stocks + 3 oracle sector stocks (seems diversified, but if it drops, everything crashes)
Buy 20 different cryptocurrencies (impossible to keep track)
Correct posture:
3-5 cryptocurrencies are already enough
Diversify across sectors (e.g., 1 AI sector + 1 DeFi sector + 1 oracle sector)
A single cryptocurrency should not exceed 1/10 of the position (to prevent heavy losses)
The 3 most common self-sabotaging actions by retail investors
Self-sabotaging behavior 1: 'I'll just average down one last time'
The lower the coin price, the more you average down, until you run out of bullets and lie flat waiting for death (refer to the 2022 crash of Chinese concept stocks)
Solution: Plan in advance how many times to average down, for example, a maximum of 3 times, with at least a 10% drop between each
Self-sabotaging behavior 2: 'This time is different'
Heard a rumor and went all in, turning the account into a casino.
Solution: For any news cryptocurrency, do not invest more than 10% of your position on the first buy, add slowly after verification
Self-sabotaging behavior 3: 'Stubbornly holding on to the end'
Holding onto a single cryptocurrency while losing more than 8% leads to deeper losses
Blood and tears formula: A 50% loss requires a 100% gain to break even
The 3 most practical position management methods in 2025
Method 1: Pyramid buying method (suitable for bull markets)
Operation: Buy 30% for 10 units → rise to 11 units add 20% → rise to 12 units add another 10%
Advantage: The more it rises, the more you earn
Disadvantage: Requires patience to wait for trend confirmation
Method 2: Funnel-shaped averaging down method (suitable for bear markets)
Operation: Buy 10% for 10 units → drop to 8 units add 15% → drop to 6 units add 20%
Advantage: Can average down costs during a crash
Risk: If it’s a junk coin, you’ll keep losing as you average down
Method 3: Dynamic balance method (suitable for choppy markets)
Operation: Spot and contract both account for 50%, profit from contracts then buy spot, stock up on spot
Effect: Automatically achieves high selling and low buying
