The importance of position management and capital management in investment is self-evident. Many investors have suffered heavy losses due to their failure to correctly understand and master these two concepts. The following is a detailed answer to your question:
1. Why avoid full positions with 10x leverage
Although full positions and high leverage transactions may bring high returns, they are also accompanied by extremely high risks. In investment, we cannot use full positions and high leverage for every transaction, but should make reasonable adjustments based on the certainty of the market. In high-certainty markets, leverage can be appropriately increased, while in low-certainty markets, leverage should be reduced or avoided. This can reduce risks and avoid huge losses due to a wrong judgment.
2. Investment strategies in bull and bear markets
In a bull market, due to the obvious overall upward trend of the market and relatively more investment opportunities, investors can participate in the market more actively. However, in a bear market, the overall downward trend of the market is obvious, investment opportunities are relatively few, and risks are correspondingly increased. Therefore, investors need to manage positions and funds more carefully to avoid losses due to over-investment. In the current market environment, it is particularly necessary to emphasize the importance of risk control and rational investment.
3. Inspiration from actual cases
The experience of investing in mining pools in 2021 that you mentioned is a profound lesson. The risk control rules originally set were broken by the temporary high returns, which eventually led to significant losses. This reminds us again that we must adhere to principles and risk control rules in the investment process and cannot be confused by temporary interests.
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