Many people have a misconception about position sizing, thinking it’s just about controlling the amount of capital used—actually, that’s only a superficial understanding. The core function of position management is to help you control your trading emotions.

Imagine going all-in and hitting a limit-down. At that moment, any market fluctuation can anger you, making rational responses nearly impossible. Once emotions spiral out of control, the situation completely spirals — often leading to a series of mistakes, sinking deeper and deeper.

Conversely, if only a 10% position hits a limit-down, the situation is entirely different. As long as the fundamentals are solid and the entry isn’t at an overly high point, holding on won’t cause much psychological burden. Even if you cut losses, your energy won’t be severely depleted, and your emotions won’t fluctuate wildly.

There’s an important causal chain here: emotions influence mindset, mindset influences responses, and responses directly impact results. Essentially, position management is risk management, and it’s also mind-set management.

Mastering position management boils down to one word—slow. Develop a habit: make decisions after 2:30 PM. By this time, the strength of the market that day is pretty much clear. Most mistakes in the crypto space stem from rushing. Slowing down can reduce 90% of errors. Slow is fast.

Truly understanding and properly executing position management will produce immediate results. Your trading mindset and attitude will improve significantly. Some beginners might say, “I have little capital, so I don’t need to manage my position.” That’s a misconception. Position management is strategic; no technique can replace it.

Having been involved in the crypto space for 10 years, these are lessons learned through blood and sweat. Mastering position sizing is the real entry into trading.