In the cryptocurrency space, many people harbor dreams of financial freedom. However, the reality can be harsh; heavy losses from significant drops and small gains have become the norm. Why do others thrive in the crypto space while you keep getting burned? The secret lies in position management.
When trading cryptocurrencies, you need to solve five key questions: what coin to buy, when to buy, how much to buy, when to sell, and how much to sell. Among these, the seemingly simple question of 'how much to buy' is precisely the core factor that determines whether you can profit in the crypto space. Those who make a fortune in a bull market rely not only on luck; position management is their secret to making money.
Next, I will share three super practical position management methods.
Rectangular Position Management Method: The 'Stabilizer' in a Volatile Market
This method is very simple; you divide your funds into several equal parts, commonly into three, five, or even ten parts. Each time, invest the same amount to build your position. If you are unsure about the market trend and don't know whether it will rise or fall next, this method is foolproof. In a volatile market, by adding positions in fixed amounts, you can gradually spread out the risk and steadily root yourself in the cryptocurrency space.
Funnel-Type Position Management Method: An Essential 'Tool' for Bottom Fishing
Also known as the Inverted Pyramid Management Method. Imagine dividing your positions from the bottom to the top into 5 parts, with proportions of 10%, 15%, 20%, 25%, and 30%. If you anticipate a prolonged market downturn, this method will come in handy. When the market first starts to decline, invest a small amount of capital, so you still have plenty of funds to increase your position as the market continues to fall. Take Bitcoin as an example; suppose the current net value is 65,000. Set a 10% drop to add 10,000, then a 20% drop to add 20,000, and so on, until the market rebounds. However, be careful not to have intervals between each additional investment too close together, or you might run out of funds before the market hits the bottom. This is a great way for left-side trading to catch the bottom, and once you succeed, you can seize the subsequent major trend.
Pyramid Position Management Method: The 'Wealth Amplifier' in a Bull Market
Unlike the Funnel-Type Position Management Method, the Pyramid Position Management Method starts by investing a large amount of capital when building a position, gradually decreasing the proportion of additional investments as the market rises. This method is suitable for use when the market has already established an upward trend, which is known as right-side trading. When a bull market arrives, quickly use a large number of chips to lay the foundation for profit, and then cautiously add small amounts later. An old Wall Street adage states: 'In a bull market, the most important thing is to hold onto your chips until a significant reversal signal appears.' By using this method, you can follow the market and make substantial profits during a bull market.
Among these three position management methods, there is no absolute good or bad. The market is unpredictable, and you must choose the method that suits you best based on your judgment of the market. Moreover, regardless of which method you employ, don't forget to keep a portion of liquid funds in your account to flexibly respond to various situations.
Investing is not just about simple buying and selling; it reflects your cognitive abilities. Don't always think of 'going all in' to become rich overnight, nor should you always be 'lightly holding' in fear. The truly skilled are those who can control their positions. Learn position management, avoid recklessly increasing leverage, going all in, or holding empty positions, and say goodbye to the fate of being a 'leek' as you embark on your profitable journey in the cryptocurrency space!#美国加征关税