Common Misunderstandings for Beginners --- Inverted Pyramid Positioning

First, let’s explain what inverted pyramid positioning is:

When BTC was at $90,000, I opened a long position of 1,000 U. The market was great, and BTC rose to $96,000, making me feel quite pleased. After a round of correction, BTC dropped to $94,500. I thought the correction was over and added 2,000 U to my long position. Sure enough, I seized this opportunity, and the market skyrocketed to $106,000, then corrected to $104,000 and hovered. I felt invincible and decisively added another 5,000 U, preparing to go big. However, after reaching $108,000, it crashed directly to $99,000.

Throughout the entire long position process, BTC went from $90,000 to $99,000, a 10% increase, but let’s calculate my return:

1000 * (99000/90000) + 2000 * (99000/94000) + 5000 * (99000/104000) - 8000 = -34 U

All that effort for nothing, and I even lost a meal of pig’s trotters.

If during this period my mindset collapsed and I blindly went against the market, it would have been even more terrifying.

Remember: Never increase your position blindly! If you initially use 20% of your capital to open a position, always keep in mind the purpose of the remaining capital: it is to help you average down your costs after making a wrong directional move, find opportunities to break even, and exit quickly.

Trading is not about going all-in, nor will it make you wealthy overnight; we seek at least a 51% win rate.

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