1️⃣ What is loss-based positioning?
The core idea is to consider the maximum acceptable loss first, and then decide the investment amount.
Expert: Think about failure before thinking about victory
Newbie: Go all in, thinking of making 100 times the profit, start panicking when the price drops 10 points, want to die, and exit at a loss.
By setting a loss-making position, you can avoid a mental breakdown due to a market reversal after entering the market.
2️⃣ How to implement it?
Assuming that the maximum acceptable loss is 2% of the total investment, and the stop loss point of a certain investment is set at 10% below the entry price, then the amount of this investment should account for 20% of the total.
Example: The total investment amount is $10,000, and the maximum acceptable loss is $200 (2%). If you expect to sell a digital currency if it drops by 10%, you should invest $1,000 (20% of the total amount).
To simplify it further: if you buy memecoin and you don't mind losing $1,000 to zero, then buy a position within $1,000. Forget about it after you buy it, and don't look at it three hundred times a day.
3️⃣ Expansion
Position management is the inner strength of speculation. If you do it well, you can prolong the life of speculation and live into the bull market that belongs to you. If you do it poorly, it will be difficult to recover in your lifetime. For example, many people in Shenzhen bet millions or tens of millions on BZZ, but ended up with heavy losses.
Summary: Setting positions based on loss can effectively extend the life of speculation, control losses, avoid mental breakdown, and ultimately obtain profits at the right time.