Many people think that using
#NOT as a full position represents a strong ability to resist risks, but this idea is fundamentally wrong. If full positions are not used properly, the speed of liquidation can be much faster than in a segmented position model.
A few days ago, one investor I was guiding had $20,000 in his account. He adopted a full position model, originally planning to withstand the ups and downs of the market. But who would have thought that in just a few days, $5,000 was gone. When he reviewed the situation with me, he looked completely puzzled and even asked me, "Isn't a full position safer?" I asked him how many types of cryptocurrencies he bought with the full position. He said there were four or five types, and he opened positions in each. I told him, this is not a full position strategy; it's clearly gambling with the entire account. The biggest pitfall of a full position is not the terrifying leverage, but rather the overly dispersed positions. Putting several types of cryptocurrencies in one account means that if one of them encounters an issue, the entire account could be wiped out. On the surface, it seems like risk is diversified, but in reality, all risks are piled together. In a segmented position model, at least it can ensure that even if one cryptocurrency loses everything, it won't affect the others. In a full position model, if one cryptocurrency is liquidated, it can lead to total loss.
Later, I had him switch to a segmented position model, managing each cryptocurrency separately and strictly controlling the position size within 10%. In the first week, one of his cryptocurrencies lost value, but the others were still fine. He even remarked, "If I had used a full position before, I would have been completely finished this time." In fact, the key to liquidation has never been leverage, but rather position size. If the position is too heavy, even with just 2x leverage, it could lead to liquidation; if the position is light, even with 100x leverage, there’s nothing to fear. In a full position model, position size is crucial for survival. A full position is not meant to stubbornly hold onto positions, but to control position sizes. If one cannot even manage position sizes properly, a full position can lead to a much quicker demise than a segmented position. If you want to discuss how to manage position sizes, feel free to reach out to me.