What does the position in the currency circle mean? A brief introduction to currency circle positions

As we all know, cryptocurrency is a digital or virtual currency that uses passwords in cryptography to ensure security. But unlike traditional currencies, it is not backed by a government or bank, instead it is tracked and traded on a decentralized public digital ledger called a blockchain. Many people now regard cryptocurrency as a good investment. Investing in cryptocurrency is actually relatively similar to investing in stocks. As we all know, there are generally positions in stock investments, and the same is true in the currency circle. Positions are equally important to investors.

What does the position in the currency circle mean?

In currency trading, position actually refers to the ratio of the investor’s actual investment to the actual investment funds. For example, if you have 10,000 actual investment funds and you use 3,000 yuan to purchase a certain currency, your position will be 30%. If you buy all the coins with 10,000, the position is full, and if you sell all the coins, the position is short. Positions are divided into three types: light position, medium position, and heavy position. The difference between the three positions is the proportion of margin occupied.

The control of positions in transactions is divided into the following three situations:

1. Trading with the trend

In currency trading, you can keep the mid-term position and use other positions as liquidity positions. Specific settings can be adjusted according to the individual needs of investors. If investors value short-term operations, they can increase their liquidity positions; if they value mid-term operations, they can reduce their liquidity positions.

2. Orders against the trend

In currency trading, when placing orders against the trend, before the consolidation area breaks through, investors need to take light positions and try not to carry out heavy positions. Wait for the breakthrough before appropriately increasing the position ( You can add a position to the middle position). In counter-trend trading, unless there is a significant change in the direction of the market, there will be no opportunity for heavy position operations.

3. Sideways trading

Consolidated position control in currency circle trading is relatively strict. Before the consolidation area is broken through, heavy positions are not allowed. After the breakthrough, the position can be gradually increased. In addition, you need to establish a position before opening a position in currency trading, and position control also starts from the position. Under normal circumstances, it is best for investors to control the size of their positions within 20% of their total funds to avoid liquidation. After establishing a position, investors need to increase or decrease their position appropriately based on their actual situation and market fluctuations.

How to cover positions in the currency circle?

1. Do not cover positions if the market is unstable.

When the trading market is in a downward or rebounding trend, you cannot choose to cover your position. Because if the downward trend continues, choosing to cover your position will cause more losses.

2. If the decline is large, you can choose to cover your position.

When the trading market is declining significantly and a large loss occurs, you can choose to cover your position. Because covering positions when the decline is not obvious, the subsequent decline space will be more difficult to predict, and a large decline also means that the downside space is already relatively limited.

3. Do not cover your position in the early stage of a bear market

When the currency price does not fall very seriously, you must firmly choose not to cover your position. When the current price of the currency circle is 5% lower than the purchase price, if you choose to cover your position, it is easy to be unwound during any intraday shock. In the early stages of a bear market, the market is prone to sudden changes, so you should patiently observe before making a decision.

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