What's the difference between opening a $1000 contract with 10x leverage and a $2000 contract with 5x leverage📢📢 In one sentence: Regardless of your margin, whether it's $1000, $2000, or $5000, 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%.
🧐 Their value is the same, but the liquidation prices will be different. If you have a principal of $10,000, a $1000 contract at 10x allows for ten opening opportunities, while a $2000 contract at 5x only allows for five opening opportunities. The value and profit are the same; which would you choose?
🌟🌟 In the 👃🏻 circle, if you do a good job in position management, you will outperform the vast majority of people.
‼️ Position management refers to a specific plan for when you decide to trade cryptocurrencies, including opening, increasing, decreasing positions, and how to close positions. Good position management is one of our important means of risk avoidance, capable of minimizing losses and maximizing 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 alone can determine the outcome. In fact, market analysis is just the most basic work; what truly determines the outcome is the work that follows the market analysis, which is the issues you consider after entering the market.
Position management includes capital management and risk control. More importantly, it involves when to increase positions, by how much, where to decrease positions, and by how much.
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, how to handle profits, whether to increase positions, take profits and exit, or continue holding. If there's a loss, how to handle it: is it a stop loss, or should you hold the position, or partially exit first? At what loss will you exit completely?
3️⃣. Strictly execute trades; once your plan is clear, you must start implementing it without letting market fluctuations disrupt your thinking.
4️⃣. Summarize trades; after completing a trade, you need to review it alongside previous trades over a period of time. The review should cover three market states: rising, falling, and fluctuating. 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 the stop loss is set 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 limitless. After entering the market and rising, we can hold the original position while waiting for further increases, or gradually increase positions based on the original position; we will adjust the stop loss based on market developments.
✔️ When the price rises again to a new support or resistance level and then begins to retreat, the area below this support or resistance level becomes the area for reducing positions. At this time, we need to gradually close all positions.
🔥 To summarize: First, we need to find a support and resistance line for the cost price. When the price rises far from the cost line, we gradually increase positions, and the increases must be gradual. When the price falls further from the cost line, we gradually reduce positions, and the reductions must also be gradual. Your position management strategy must consider both risk and profit.
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