《How to Unwind Positions Complete Refined Version》

How to unwind? First, understand how the position was created and how it was caught.

First: The wrong direction was taken, chasing gains and cutting losses in the wrong way. When at the upper band, reduce long positions to protect capital, raising the breakeven point, and it’s also a good time to start trying to enter short positions. When a certain coin is stuck at a level where it cannot move up, which is a resistance level, attempt to open a short position. At this point, you should reduce long positions or exit, rather than chasing the rise. The opposite is true for a downtrend—counteracting the previous move. These are all signs of a wrong direction.

Second: Poor position management. Position management is very important, second only to correct direction judgment.
If the initial position is heavily weighted, subsequent replenishments will be difficult, and over time, positions will become heavier and heavier, ultimately leading to only one outcome—liquidation.

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

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

Fourth: Not strictly executing your trading strategy.
Failing to attempt entries when conditions are right, leading to missed opportunities.
Over-leveraging when it’s time to be light, and chasing gains or cutting losses impulsively.
These combined factors will lead to being caught in a position, unable to unwind temporarily.
Therefore, strictly following your trading plan can also help avoid being caught.

These four reasons stack up and lead to being trapped.

Summary:
1. Chasing gains and cutting losses in the wrong direction.
2. Poor position management: heavy initial position, no capacity to add later.
3. Greed: unrealized gains turn into floating losses, compounding the previous two mistakes.
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 just slightly profitable—this is the optimal solution.
2. When the direction was correct but due to reasons like not monitoring the market timely, you got caught in a position.
(1) For heavily leveraged positions, refer to the first point: do not add to the position. If long and caught, approach the next level of resistance, and strictly execute one action—reduce the position or just run away, admit the mistake, and treat it as a lesson fee.
(2) For lightly leveraged positions, there are two scenarios:
- First, run near the resistance level, keep running.
- Second, miss the opportunity to reduce at the current resistance level, then add three times the position at the lower band to average down. After that, exit near the entry price with slight profit, and do not expect large profits afterward. Do not be greedy.

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

Based on analysis, what is the best unwinding plan?

1. For positions with poor entry points, slightly profit near the entry price (wait for a dip, as dips are inevitable), then close and run, restoring your freedom.
It’s also acceptable to not profit, just take a small loss to exit. Proper stop-loss is to better preserve the principal; capital preservation is more important than profit.
Actually, when opening a position, the first consideration is not how much you can earn, but how much loss you can accept. First, consider the acceptable loss, then focus on capital preservation, and finally on profit. (Prioritize capital preservation over profit.)
Of course, the premise is to dare to try and make mistakes. Without trying, there’s no subsequent opportunity. No losses or profits.

2. Any lightly leveraged position can add to the position at key levels, tripling the position 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 never a perfect position, only relatively good ones. There is no best, 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 about to be liquidated, what to do? Quickly lock the position to preserve capital.
Open a hedge in the opposite direction: open a position in the opposite direction with 50% of the margin of the original position, and set a breakeven stop-loss after profits are realized to prevent floating losses and the need to unwind again.