Methods for Unwinding Positions are generally divided into two types.
1. Active Unwinding Strategies
1. Cut Losses
If buying was a serious mistake, especially when buying at the peak of a previous surge, one must have the determination to decisively cut losses and bail out in a timely manner to secure capital safety. There are many opportunities in the cryptocurrency market; as long as capital is not significantly lost, it can always be earned back.
2. Currency Swap
If the cryptocurrency held is in a weak position and has further downside potential, and if one accurately judges that another cryptocurrency has a greater potential for price increase and stronger trends, one can decisively swap to the new cryptocurrency to offset losses from the old one with profits from the new one.
3. Short Selling
When it is determined that one is deeply trapped and cannot cut losses, and if the overall market or a specific cryptocurrency has further downside potential, one can use short selling by first selling the trapped cryptocurrency and waiting to buy it back at a lower price to effectively reduce costs.
2. Passive Unwinding Strategies
1. Averaging Down
When the purchase price is not high or when there is a firm optimistic outlook for the future market, one can choose to use averaging down techniques. However, ordinary investors' funds can typically only withstand one or two rounds of averaging down, so the timing for averaging down is crucial.
2. Lying Flat
When fully invested and deeply trapped, with neither the ability to cut losses nor to add to positions, one can only passively wait. As long as it is one's own money, not borrowed or lent, there is patience to wait. One must not act emotionally by throwing caution to the wind, blindly adding to positions, or haphazardly cutting losses. Being trapped is not terrifying; sometimes not being trapped means not making money, and being trapped could potentially lead to significant profits. Therefore, do not simply view being trapped as a disaster; if handled properly, it can completely turn into an opportunity.