《How to Unwind Positions Complete Refined Version》

How to unwind? First, understand how the position was formed and how you got into it.

First: The wrong direction was taken—chasing gains and cutting losses in the wrong way. When the price hits the upper band, reduce long positions to protect capital, and this is also a good time to start trying to enter short positions. When a certain coin is stuck at a resistance level and cannot move higher, it’s an attempt to open a short. At this point, you should reduce long positions or exit, rather than chasing the rally. Conversely, when the price is falling sharply, it’s the opposite—reversing the previous approach. These are all signs of wrong direction.

Second: Poor position management. Position management is extremely important, second only to correct directional judgment.
If the initial position is heavily weighted, subsequent replenishments will be difficult, leading to increasing position size and ultimately only one outcome—liquidation.

The correct strategy should be: label the first entry with 1U, then enter a light position for the second, and a normal position for the third. Do not over-leverage.
Over-leveraging results in an inability to add to the position, so leave enough room above the current resistance level for adding positions.

Third reason: Greed.
If profits are not taken, floating gains are just illusions. Unrealized gains are meaningless; what’s in your hands is just a temporary hold, a glance at potential profit.
After setting a stop-loss to protect capital, the position remains profitable and will not generate floating losses.

Fourth: Not strictly executing your trading plan.
Failing to attempt entries when conditions are right, leading to missed opportunities.
Over-leveraging when it’s not appropriate, and chasing rallies or cutting losses impulsively.
These combined factors result in being stuck in a position, temporarily unable to unwind.
Therefore, strictly following your trading plan can also prevent getting trapped.

These four reasons combined lead to being stuck in a position.

Summary:
1. Chasing gains and cutting losses in the wrong direction.
2. Poor position management—initial heavy position, no capacity to add later.
3. Greed—floating profits turn into floating losses, compounding the previous two errors.
4. Having a plan but not strictly executing your trading strategy.

How to unwind:
1. Exit near the entry price (exceeding or close to the entry price) or when slightly profitable (the optimal solution).
2. When the initial direction was correct but due to reasons like not monitoring the market timely, you got trapped.
(1) For heavily leveraged positions, refer to the first point—do not add to the position. If long and trapped, approach the next level of resistance, and strictly execute one of these actions: reduce the position or just run away—accept the loss as a lesson.
(2) For lightly leveraged positions, there are two scenarios:
- First, run near the resistance level—run, run, run.
- Second, miss the opportunity to reduce at the current resistance, then add three times at the lower band to average down, and exit near the entry price with slight profit. Do not expect large profits afterward; greed is dangerous.

A particularly important note:
Profits can be left uncut, aiming for better positions is acceptable, but you must set a stop-loss to protect capital. The goal is to avoid losses, not necessarily to make profits.

Based on analysis, what is the best unwinding plan?

1. For poorly positioned trades, slightly profit near the entry price (wait for the dip, which will happen) and close the position to regain freedom.
It’s also acceptable to take a small loss to exit early—proper stop-loss is for protecting the principal, which is more important than profit.
Actually, when opening a position, the first consideration isn’t how much you can earn, but how much loss you can accept. Acceptable loss comes first, then capital preservation, and finally profit. (Capital preservation has higher priority than profit.)
Of course, the premise is to dare to try and make mistakes—without trying, there’s no progress. No losses, no gains.

2. For all lightly leveraged positions, you can add to the position at key levels—triple the position size—to average down, then slightly profit or reduce at the entry price, or just run away.

3. Not recommended but still an option: increase margin, average down at key levels, then repeat the optimal solution—run near the entry price.

Another point: There is no “best” position, only relatively good ones. There is no perfect, only relatively good. Dare to try with light leverage to make mistakes; only then can you have future opportunities. Without trying, there’s nothing.

4. Extreme case unwinding strategy: if liquidation is imminent, what to do? Quickly lock the position to protect the principal.
Open a hedge in the opposite direction: open a position with 50% of the margin in the opposite direction, and set a stop-loss to protect capital after profits are realized, preventing floating losses and needing to unwind again.

Important notes:
1. When hedging and locking positions, do not set any stop-loss or take-profit orders, as the system will automatically execute them, risking liquidation. Manual unwinding is the only way.
2. Do not place too many orders—limit to 1-2.
3. Try to focus on only one coin to prevent liquidation in extreme market conditions.