Actually, their values are the same; the total position is ten thousand dollars, but your liquidation price will be different. If you have a capital of 10,000 and leverage of 10 times, you have ten chances to open positions, while with 2,000 and 5 times leverage, you only have five chances to open positions. The value and return are the same; which one would you choose?
In the cryptocurrency space, if you manage your positions well, you will outperform the vast majority of people.
Position management refers to a specific set of plans you set for opening positions, increasing positions, decreasing positions, and how to liquidate when you decide to trade cryptocurrencies. Good position management is one of our important means of avoiding risks, achieving minimal losses and maximizing profits!
How should positions be managed? Is there a standard? Many traders fail, and one of the key reasons is that they treat market analysis as everything in trading, as if analyzing the market can determine the outcome. In fact, market analysis is just the most basic work; what truly determines the outcome is the work done after the analysis, which includes considerations once you enter the market.
Position management, including capital management and risk control. More importantly, when to increase positions, how much to add, when to reduce positions, and how much to reduce.
The complete trading process should be:
1️⃣. Market analysis, you can use any technical analysis.
2️⃣. Position management. After entering the market, you need to consider what might happen next: what to do with profits, whether to increase positions, take profits and exit, or continue holding. If you incur losses, what will you do? Is it a stop-loss, holding the position, or partially exiting first? How much loss would lead to a full exit?
3️⃣. Strictly execute trades. Once your plan is clear, you need to start implementing it without letting market fluctuations disrupt your thinking.
4️⃣. Summarizing trades, after completing a trade, it is necessary to review the trades from the previous period. The review samples should span the three market conditions: uptrend, downtrend, and sideways. When the market is above the support line, the trend is upward; when the market breaks below the support line, the trend is downward. More importantly, the support line also serves as the basis for defining potential risks. When the stop-loss is placed below this support line, the potential risk magnitude is determined.
On the contrary, the potential profit range is above the support line, and the upward trend in the market has not ended, so theoretically, the potential profit is unlimited. After entering the market and prices rise, we can hold the original position or increase positions on a decreasing basis, and we will adjust the stop-loss based on the market's development.
When the price rises again to a new support or resistance level and then starts to fall back, the area below this support or resistance level becomes the area for reducing positions. At this point, we should gradually liquidate all positions.
🔥 To summarize: First, we need to find a support and resistance line for the cost price. When the price rises far from the cost line, we gradually increase our positions, and the increase must be decreasing. When the price falls and gradually moves away from the cost line, we gradually reduce our positions, and the reduction must also be decreasing. Your position management techniques must balance risk and return.