Recently, we've been talking about position management, beginners can come and learn.
Just like this time's trading failure, let me explain how to manage positions. I normally control my initial position at 3%. Don't complain that the profit is small, as I will explain later.
Assuming there is a reversal during the process, we find the minor resistance lines in the market to add positions. Adding positions is not just about continuously adding until we explode, while adding we must also understand how to reduce positions. If the adding point is advantageous, we can reduce.
I’m worried that beginners might not understand: for example, if you go long at 90,000 and the market drops to the first support level (let's say 88,000), and your initial position is 2 BTC, you add another 2 BTC. At this point, your opening price will be around 89,000. If the market rebounds from 88,000, for example, to 88,500, you sell the 2 BTC you added, and the loss is just the 2 BTC multiplied by the 500-point fluctuation. If the market goes above 89,000, whether you sell 4 BTC (initial position plus added position) or 2 BTC (from the added position), you are still in a profit state.
As for why I control my initial position within 3%, it's because I cannot predict the market's movements 100%. Earning less is fine, not losing is good, and small losses are even better; it’s more stable. Like today, some fans opened positions at 10%, which is quite large. Assuming a margin rate, if your initial position is 1.5%, and the market does not meet expectations, even if you add once, you would still only reach 3%. When you sell the added position, the margin rate will return to around 1.5%. If you go in at 10% or even more, you can calculate your operational space and the probability of being targeted by market manipulators.
The original intention of opening a position is to make money, but I must mention that if you are stuck in a position and cannot add, you may be reluctant to cut losses. If you add, your liquidation price will be closer, and you'll panic, making random operations, or even blindly stop-loss. At that time, your stop-loss and your liquidation price will not be far apart; stop-loss means liquidation, and liquidation means stop-loss. Can you understand this?
Everyone has greed, and I do too. This method yields less profit compared to high positions, undoubtedly, but the risk is also lower. As long as you compound, proceed steadily, and with many market conditions: can 10 trades reach a 50% win rate? Can 10 trades result in 30% without losses? Can 10 trades have 20% with small losses exiting? You can switch this mindset to calculate the value of returns. In front of returns and principal, the principal is greater than the value of returns. With the principal, if this market fails, I can continue to be steady in the next wave and maybe earn it back.
