Risk Control - Cryptocurrency Digital Asset Exchange Platform

Position management does not have a fixed standard for traders, only a reference standard. I interpret several related concepts based on my personal understanding; everyone may see it differently.

1. Heavy Position: A stock account with over 80% position is considered heavily invested; a futures account with over 60% is also considered heavily invested. Heavy positions can bring many risks, which will be discussed in detail later.

2. Light Position: A standard is no more than 5-10%. When opening a position for the first time, a light position is necessary for trial and error.

3. No Position: Having no position, waiting during a downward trend or consolidation of the market. Being out of the market is also a form of operation; learning to wait in cash is important.

4. Full Position: 100% allocation. Never be fully invested at all times. For example: the enemy has not been defeated, and the bullets are used up.

5. Reasonable Position: A position suitable for oneself. Position size is a comprehensive arrangement based on your capital scale, trading strategy, trading cycle, cross-market operations, etc. For example, if your capital is small, you can open a position all at once; if you are medium to long-term, you should allocate funds appropriately; intra-day and daily levels should be distinguished; trading stocks and futures simultaneously also requires reasonable allocation, and so on.

What is Profit and Loss Sharing Same Source?

Most traders tend to pursue profits and are more willing to discuss how to make more profit, while they are less willing to discuss losses. In fact, both originate from the same source: profit and loss share the same root.

1. Loss is part of profit; without loss, there is no profit. Rejecting loss is rejecting profit.

2. A system that profits in a bull market and loses money in a bear market is a true reflection of profit and loss sharing the same source. A method can only be used in one market environment; when the environment changes, losses occur.

3. The same applies in real life: a person may be harmed by their hobbies; success and failure can be two sides of the same coin.

As a public trader, I choose to focus on a single asset for the following reasons:

1. Limited funds; diversification does not showcase our advantages.

2. The principle of success is to concentrate resources on one thing, which makes success easier.

3. Limited energy.

4. Easier to build positions.

The key to trading is not just making correct decisions; another important factor is your choice.

1. Choice of trading method: speculation and value investing are not about right or wrong, but about who they suit. It depends on your own choice.

2. There are many methods for opening positions, stop-loss, and take-profit. For example, take-profit methods include trendline take-profit, fixed amount take-profit, time-based take-profit, etc. Each has pros and cons; there is no perfect method. You should choose based on your system and market environment. Your choice will always differ from the actual market trend later.

3. There is always a trade-off between risk and reward: high risk-high reward, no such thing as low risk-high reward. It depends on your choice. When you choose high reward, you must accept high risk.

4. Choice involves giving up other opportunities. When you choose a market opportunity, it means you give up others. What makes it more regretful is that this opportunity also involves uncertainty.

5. Choice is subjective and always has a gap from objective facts.

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