Cryptocurrency Unwinding Guide
The fluctuations in the cryptocurrency market are like a roller coaster; being stuck is the norm. However, the worst is not being stuck but rather stubbornly holding on and making chaotic trades. By following this practical approach outlined below, you can avoid many detours.
1. Clarify three things before unwinding; don't act blindly.
1. Look at the big picture.
Open the candlestick chart to determine whether the market is in a one-way upward trend, a one-way downward trend, or a range-bound fluctuation.
If you are stuck in an upward trend, there is no need to panic excessively.
If you are stuck in a downward trend, avoid stubbornly holding on.
Only in a fluctuating market can there be room to slowly make a profit.
2. Assess your position size.
A floating loss within 15% is considered light entrapment, still allowing for operational space.
A floating loss exceeding 30% is considered deep entrapment and requires a more decisive handling approach.
Make sure to keep at least half of your account in cash; don't spend all your bullets at once.
3. Look at the types of holdings.
Mainstream coins like Bitcoin and Ethereum tend to be resilient, offering opportunities to exchange time for space.
If altcoins have poor fundamentals and weak liquidity, decisive action is needed to avoid becoming more passive.
2. Different positions correspond to different solutions.
1. Spot entrapment.
Light entrapment during a fluctuating or upward market.
You can slightly increase your position when it tests key support levels to lower your cost.
Reduce part of your position when it rebounds close to your cost to relieve half of the pressure.
Deep entrapment in a one-way downward market.
Do not fantasize about naturally recovering.
Either decisively cut losses to protect your principal or switch to currently stronger assets to earn back the losses using time and waves.
In a fluctuating market,
engage in high selling and low buying.
Sell part during an upward trend and buy back during a downward trend.
Do not add extra money; prioritize converting profits into stable assets.
2. Locked positions with both long and short holdings.
Lock-loss type.
First, close the losing side to prevent risk expansion.
Retain the profitable side and set stop-losses until the direction becomes clear.
Lock-profit type.
Avoid greed.
First, take some profits off the table.
If the remaining position is difficult to judge, consider directly closing it to preserve your gains—this is most important.
3. The unwinding iron rules—remember these three points.
1. The maximum loss for a single transaction should not exceed 2% of total funds.
2. Only add to positions at key support levels; do not increase when the trend is unstable.
3. Avoid using leverage; do not bet on a rebound in deep entrapment.
Unwinding relies not on luck,
but on judgment, discipline, and execution.
Act logically and minimize emotional trading
to gradually emerge from being stuck.
