The purpose of trading is to make a profit. The flow of funds in the market naturally becomes the focus of our attention. Do not be restricted by a narrow concept of trading; it is best to adjust your trading objectives and methods in a timely manner based on the market.
Above is a bit of trading insight I want to share with you today, hoping it can help all traders.
A common issue among retail investors is that they feel their position is too small when they make a profit, and when they incur a loss, they feel their position is too large!
In trading, there is a widespread problem where, during an uptrend, one feels that their position is too small; while during a downtrend, one feels that their position is too large. This situation indicates that you have not managed your position size well.
In fact, whether the market is going up or down, if you haven't fully established your position, you will regret your initial hesitance. Conversely, if you have a position, you will regret not having cleared it. This mentality is a norm for cryptocurrency traders. Therefore, we often say, do not easily adjust your position size. When adjusting your position, you must carefully consider how much risk you can bear. If you are sensitive to unrealized profits or losses, then it is sufficient to keep a portion of your base position.
Here are some suggestions for position management:
1. Do not invest all your funds in the market at once unless you have decided not to adjust your position size any further.
2. Even if you are very optimistic about a certain cryptocurrency, you should build your position in batches. You should maintain a sense of respect for the market, avoiding excessive confidence and impulsiveness.
3. When averaging down, the price difference should be greater than 20%. Otherwise, it is unnecessary to average down, especially when funds are insufficient.
In summary, position management is very important. There is no need for frequent operations or complicated technical skills; as long as you can manage your position well, you can outperform most cryptocurrency enthusiasts.