Last night, a fan who has followed me for two years sent me a message, condensing his four-year contract's bitter history into one sentence: the hardest thing to give up is 'holding on to positions'.
After reading it, I felt like I was looking at my past self who refused to cut losses. So, I retold his story and reminded everyone still in the arena.
1. Holding on to positions is the shortcut to liquidation
At the end of a bull market, he chased after mainstream coins, and a long bearish candle brought his unrealized losses to 20%. He added margin and leveraged, fantasizing that 'a rebound would bring him back to break-even'.
As a result, the market continued to decline, margin was added to the limit, the liquidation light turned on, and the account returned to zero.
He said: 'If I had cut losses at that time, I would have only lost two weeks' salary; but I wanted to prove myself and sacrificed a year’s savings.'
2. Holding on to positions is a mental meat grinder
After being stuck, he slept less than four hours for ten days. Every time the candlestick moved, his heart twitched. Anxiety, luck, and regret bombarded him in turns. He began to use revenge positions to recoup, losing more and more, even dipping into his living expenses for trading. That night, he realized after finishing half a pack of cigarettes: holding on to positions turned trading into gambling.
3. Holding on to positions is a graveyard for opportunities
Last year's altcoin season, he had high hopes for a target that pulled out three large bullish candles, yet he was empty-handed— all his funds were still locked in counter-trend short positions.
He sent me a screenshot: unrealized loss -47%, three consecutive bullish daily candles. The market is never lacking; what is lacking is usable capital; holding on to positions froze his funds and also the possibility of adding to positions in the next trend.
How to give it up? I sent him three iron rules, and I send them to you:
1. Cut losses = entry fee
Before placing an order, write down your stop loss. When the price hits, cut. Cutting losses is like swiping a card to take the subway; if you don’t swipe, you can’t get on the train. Don’t wait until the train moves to regret.
2. Respect the trend, give up face
The market is always right. When the price goes against expectations, admit the mistake immediately; the faster you acknowledge it, the smaller the wound.
3. Cut your position down to a size your heart can bear
Any loss that makes your heart race is excessive. The ultimate standard of position management: if the power and internet go out tonight, you can still sleep.
He finally said: 'Those who live long don’t always guess right, but they dare to admit mistakes every time. Cutting losses is not failure; it leaves room for the next move.'
Holding on to positions to the end buries both people and the market together; learning to let go in time allows you to dance with the market. @小花生说币
