In investing, position control is crucial; never easily go fully invested. Why should you avoid going fully invested? There are several very critical reasons.
First point: Risk control
You can never guarantee that the price will immediately rise after you buy. If there is a significant market drop, assets may quickly lose value, and it can be difficult to timely add positions to lower the average cost. If your position is too heavy during this time, you may face substantial losses. Therefore, reasonable position allocation helps to reduce investment risks and avoid severe impacts on the overall investment portfolio from the drastic decline of a single asset.
Second point: Mindset control
I have had similar experiences myself; after being fully invested, I would feel anxious with even slight market fluctuations, constantly watching the market, which severely affected my mindset and made it hard to sleep at night. Without reasonable position control, the mindset can easily become unbalanced. Investing is not just a game of capital; it is also a game of psychology, and maintaining calmness and rationality is the key to success.
Third point: Easily being cut by market fluctuations
After fully investing, people often easily develop a gambling mentality. Every moment, they hope to see returns on their investments. When they see the cryptocurrencies they hold not rising, or other cryptocurrencies rising faster, they may not be able to resist cutting losses and chasing the rise. Frequent trading not only increases transaction costs but may also lead to capital losses. Over the long term, this can accumulate into losses.
Thoughts on short-term and long-term
Many people believe that short-term trading will inevitably lead to losses, but I think that with reasonable capital allocation, short-term trading can also be interesting and beneficial. The key is to control positions well and avoid frequent loss-cutting. When trading short-term, aim to 'take profit and exit' to avoid greed. Unless there are issues with the overall market or the project, short-term trading should focus on obtaining stable short-term profits rather than frequent short-term operations.
When making long-term investments, controlling positions is equally important, especially in a highly volatile market. If you tend to hold onto a single cryptocurrency or have a heavy long-term position, you may miss out on other short-term opportunities. Thus, not all cryptocurrencies have higher long-term returns than short-term ones; the key lies in how to flexibly allocate and diversify risks.
A stable investment strategy relies on reasonable position control to avoid excessive exposure to risk from being fully invested. At the same time, maintaining a calm mindset and avoiding frequent trading will allow you to better seize market opportunities. Whether long-term or short-term, there should be clear goals and strategies to avoid blindly chasing rises and falls, thus steadily realizing profits.