Family, after 3 years in the crypto space, I have fully understood the importance of position size. I made 800,000 from 100,000, but also lost 60% overnight due to being fully invested in altcoins—only after learning to plan my position size did I find the path to stable profits. Newcomers must watch!
Why is position size a lifesaver?
In 2022, when LUNA crashed, my brother lost everything with 150,000 fully invested; I had 60% in mainstream coins + 30% in altcoins + 10% in stablecoins, and the mainstream coins held up, resulting in only a 12% loss. Surviving is key to making a comeback, and that’s the difference.
Previously, I would rush in when MEME coins rose 300%, only to see them drop 70% the next day. Now, using the '532 rule' (50% mainstream + 30% potential + 20% cash), I increase my position according to plan, avoiding being an impulsive retail trader.
This year, with the explosion of AI coins, my reserved 20% cash was just right to buy AGIX and FET, yielding a maximum gain of 4 times! If fully invested, I wouldn't even have the chance to get in—only with flexible position size can one capture market trends.
Beginner operational strategy:
The conservative '631 rule' is suitable for novices: 60% mainstream coins (BTC/ETH/SOL) for resilience, 30% blue-chip altcoins (LTC/ADA) to follow the market, and 10% stablecoins (USDT/USDC) kept for bottom-fishing.
Advanced players should use '532 dynamic allocation': hold 50% in mainstream coins long-term, 30% in potential coins (Layer2, AI, etc.) with a profit-taking range of 50%-100%, and 20% cash to buy on dips over 20% (e.g., buy 5% if BTC drops below 25,000).
Iron rule: do not exceed 15% position size in a single coin. I once heavily invested 40% in a DeFi coin, and when the project team ran away, I directly lost 28%! Now, even if I am optimistic, I buy at most 10%-15%, as diversifying risk is the way to go.
Avoid these pitfalls: being fully invested in a single coin is gambling with your life; using leverage to buy more can lead to liquidation with just a 10% drop (all blood and tears), and 90% of the 'hundred times coins' touted by the community are just scams; don’t follow the crowd.
The core of making money in crypto is not about buying the right coins, but surviving through the risks. Planning your position size is like insuring your account; it may not make you rich quickly, but it allows you to sleep well during downturns and have money to invest when opportunities arise. This is a lesson I learned after countless falls.
