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In the cryptocurrency trading world, it is often heard that most people encounter stories of liquidation. However, this is not due to luck, but rather stems from a misunderstanding and improper application of the 'rolling position' technique.
Many traders often fall into some common misconceptions: they rush to take profits when the upward trend is weak, missing out on significant upward opportunities; they blindly add to their positions at the first sign of a downward trend, ultimately incurring heavy losses; or they may correctly judge the direction but are forced to exit due to minor fluctuations. These behaviors resemble speculative actions without basis rather than rigorous trading.
So, how do experienced traders operate? The core principles they follow can be summarized in three points:
1. Manage your principal with caution: never invest all your funds into a single trade, and the initial position should typically not exceed 5% of the total funds.
2. Choose the right time to increase your position: Only use the profits gained to add to your position, do not add funds when there are losses.
3. Implement hedging protection: When floating profits exceed the initial investment, timely lock in part of the profits.
Let us illustrate this strategy with a practical case to cope with the potential significant decline in Bitcoin.
Assuming you have an initial capital of 10,000 USDT, you expect BTC to experience a significant decline.
Phase One: Exploratory Position Opening
- Invest 500 USDT (accounting for 5% of total funds) using 100x leverage, equivalent to a position of 50,000 USDT.
- Set stop loss: If the price rises by 2%, close the position immediately (maximum loss of 100 USDT).
- The key is to wait for clear signals and not to act easily.
Phase Two: Initial Position Increase
- When the profit reaches 50% (i.e., 250 USDT), use 125 USDT to increase the position, and keep the remaining 125 USDT as realized profit.
- Timing for Increasing Positions: Price breaks through the previous low point, confirming the downtrend.
- Position control: New positions should not exceed 50% of current profits.
Phase Three: Responding to Major Market Trends
- When the floating profit exceeds the initial capital (for example, increasing from 10,000 USDT to 15,000 USDT), open a reverse contract for hedging.
- As the downtrend approaches its end, consider using a portion of your profits to seize the last opportunity for an accelerated decline.
Through this strategy, an initial capital of 10,000 USDT could potentially yield a return of 48,000 USDT in a 30% market downturn. This is not based on luck, but rather on strict trading rules.
Why is it difficult for most people to do this? The main reason is:
1. Poor emotional management: being insufficiently greedy when making profits and eager to recover losses.
2. Chaotic Position Management: No clear rules for increasing or decreasing positions.
Successful trading requires strict discipline and clear strategies. By properly utilizing the 'rolling warehouse' technique and maintaining rationality at all times, traders can achieve better returns in a volatile market. However, it is important to note that trading is always accompanied by risks, and investors should make cautious decisions based on their own circumstances.