Controlling your position is controlling your destiny; operating with a full position is like driving without a seatbelt.
At 2 AM, the phone suddenly rang, and a voice with tears in it came through the receiver: "Teacher Chen, it's all gone... 5000U just disappeared like that!" A fan from Shenzhen, with a full position of more than three times, lost their entire account with just a 4-point pullback.
Looking at his trading records, he entered the market with a full position of 4900U, without even setting the most basic stop loss. Stories like this are countless in the crypto world, yet there are always people jumping into the same pit one after another.
The temptation of a full position: a fast track to wealth or a deadly trap?
Many people are blinded by the myth of 'getting rich all-in,' thinking that all-in is a shortcut to wealth. Data shows that the maximum drawdown of an all-in betting strategy can reach -54%, with a very low win rate.
All-in in the crypto space means investing all available funds in trading. While potential profits are high, the risks are equally huge. The cryptocurrency market is inherently volatile; all-in trading further amplifies this volatility, leading to more extreme profits or losses.
All-in leverage is an even more dangerous combination. With 10x leverage, a price reversal of just 5.2% can trigger liquidation. Even experienced traders often fall victim to the combination of all-in leverage.
Three Rules: The transformation from a liquidation regular to stable profits.
After years of observing many trading cases, I have summarized three rules of the 'All-in No Loss Method.' These rules may seem simple, but they helped a fan who once experienced monthly liquidation grow from 2800U to 48000U in 5 months.
Rule One: No single trade should exceed 8% of total capital.
For example, with a 5000U account, the maximum position for a single trade is 400U. Even if a stop-loss is triggered, it only loses a small part of the total capital, ensuring overall capital safety.
Avoid full position trading; it is essential to always maintain a certain proportion of backup funds. Full position trading is like going into battle without backup troops, especially in unstable markets—once a drop occurs, it can lead to a passive situation.
Rule Two: Single losses should not exceed 1.2% of total capital.
Set clear stop-loss lines, for example, open a 3x position at 400U with a preset 1.5% stop-loss point, keeping actual losses strictly controlled within a small range. It is crucial to set the maximum drawdown ratio you can tolerate and strictly execute stop-loss discipline.
Data shows that assets with losses exceeding 50% on average need more than 120 days to break even, and the probability of success is extremely low. Timely stop-loss is key to preserving capital.
Rule Three: In uncertain markets, stay out completely.
Do not blindly increase positions just because of previous profits. In unclear market conditions, it is better to stay out temporarily and wait for opportunities to arise. When the market lacks a clear direction, maintaining patience is often the best strategy.
Disciplined traders spend 1 hour every Sunday night planning the varieties to trade and the planned positions for the next week, and then they execute strictly. This planned trading approach is much more effective than blindly staring at the market.
Leverage: not a tool for wealth, but an invisible killer.
Leverage can amplify gains but also amplify risks. Many investors use leverage to achieve higher returns, but once the market moves unfavorably, they face massive losses, even total loss of capital.
High-leverage markets are unhealthy; they amplify investment risks and exacerbate market volatility. In contract trading, reducing leverage is an effective way to reduce risk; beginners are advised to use leverage below 3x.
Lessons learned from liquidation.
The case of that fan from Shenzhen is not an isolated incident. In the recent market crash, over 190,000 people were liquidated in the virtual asset market, with a total liquidation amount reaching 553 million USD. Behind these shocking figures are irrational all-in decisions.
"Disposition Effect" is a common psychological trap for investors: selling profitable positions too early while holding losing positions for too long. This psychological bias stems from humans' natural aversion to loss, leading to expanding losses.
True trading experts are not those who become famous in one battle, but those who survive long-term in the market as risk managers. They understand that the market is never short of opportunities; what is lacking is the patience and discipline to protect capital and avoid traps.
Conclusion: Redefine your trading strategy.
The essence of all-in trading is turning investment into gambling. True mature investors manage their positions as a core skill.
Change your focus: from 'how much can I earn' to 'how much can I lose'; from 'chasing profits' to 'controlling risks'; from 'all-in gambling' to building positions in batches.
In this highly volatile crypto market, reasonable position management is key to long-term survival. It may not make you rich overnight, but it can help you go further in the crypto space.
Have you ever experienced the pain of an all-in liquidation? Feel free to share your experience—let's grow together from our lessons. Follow Xiang Ge to learn more firsthand information and precise insights about the crypto world, becoming your guide in the crypto space; learning is your greatest wealth!#加密市场反弹 #美联储降息 $ETH
