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Position management is one of the core elements that determine long-term profitability when engaging in Futures Trading in the crypto world. Proper position management can effectively control risks, avoid Get Liquidated, and maximize profit potential. Here are the key points and strategies:
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### **1. Basic Principles of Position Management**
- **Risk Control Priority**: It is recommended that the risk of a single trade does not exceed **1-3%** of the total funds (e.g., for an account of 10,000 USD, the maximum loss per trade is 100-300 USD).
- **Use Leverage Cautiously**: High leverage (such as 50x, 100x) amplifies volatility, while low leverage (5x-20x) is more suitable for steady operations.
- **Avoid Full Position**: Even with great confidence, one should not bet the entire position; retain funds to deal with extreme market conditions.
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### **2. Specific Management Strategies**
#### **(1) Fixed Ratio Method**
- Use a fixed percentage of total funds for each opening position (e.g., 5%-10%), dynamically adjusting the position based on account balance.
- **Applicable Scenarios**: Suitable for volatile markets or when the trend is unclear.
#### **(2) Pyramid Positioning Method**
- Start with a small position (e.g., 20%) and increase the position in batches after confirming the trend, but decrease the proportion of each additional position.
- **Key Point**: When increasing your position, you must set a stop-loss strictly to avoid turning profits into losses.
#### **(3) Martingale (High Risk!)**
- Doubling down after a loss and closing the position after breaking even. However, the crypto world is highly volatile, which may lead to getting liquidated quickly; beginners should use caution.
#### **(4) Kelly Criterion Optimization**
- Calculate the optimal Position based on win rate and odds:
\( f^* = \frac{bp - q}{b} \)
(\( f^* \): Position Ratio, \( b \): Odds, \( p \): Win Rate, \( q = 1-p \))
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### **3. Stop Loss and Take Profit Settings**
- **Stop Loss**: Must be set in advance, technical stop loss (such as breaking below support level) or fixed percentage stop loss (such as -5%).
- **Take Profit**: Take profit in stages (e.g., close 50% of the Position at a 1:2 risk-reward ratio, and hold the remaining for higher returns).
- **Trailing Stop**: Move the stop loss to protect profits after gaining.
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### **4. Leverage and Margin Management**
- **Leverage Selection**:
- Low volatility coins (such as BTC/ETH) can appropriately increase leverage (10x-20x).
- Highly volatile altcoins are recommended to use very low leverage (2x-5x).
- **Margin Monitoring**: Avoid getting liquidated due to a low margin rate, and reserve additional funds to deal with spikes.
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### **5. Responding to Extreme Market Conditions**
- **Black Swan Event**: A common moment of sudden drop/rise in the crypto world, needs:
- Reduce leverage or hedge in advance (such as options).
- Avoid holding large positions before major news (such as Federal Reserve meetings, exchange crashes).
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### **6. Psychology and Discipline**
- **Avoid FOMO**: Do not over-leverage due to fear of missing out on opportunities.
- **Regular Review**: Analyze trading win rate, profit-loss ratio, and optimize strategies.
- **Downtime Rules**: Pause trading after consecutive losses to avoid emotional trading.
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### **Example Calculation (10,000 USD Account)**
- **Single Trade Risk**: 2% = 200 USD
- **Trade BTC**: Entry price $60,000, Stop loss $58,000 (-3.3%), then the contract Position should be:
\( \frac{200}{60,000 - 58,000} = 0.1 \text{BTC} \)
If using 10x leverage, the margin used is about 600 USD (6% Position).
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### **Summary**
The high volatility of contracts in the crypto world is both an opportunity and a trap. The essence of position management is **to use mathematical probabilities to overcome market emotions**. No matter how accurate technical analysis is, without strict position control, an extreme market event could wipe out everything. It is recommended to start training with a demo account and gradually develop a system that suits you.