Position Sizing

1. What Is Position Sizing?
   • Definition: The amount of capital you allocate to a single trade.
   • Why It Matters: Proper position sizing minimizes losses and maximizes gains.
2. How to Determine Position Size:
   • Risk Per Trade: Only risk 1-2% of your total capital on any single trade.
     • Example: If your portfolio is 10,000,risk10,000,risk100-$200 per trade.
   • Diversify: Spread your investments across multiple coins to reduce risk.
     • Example: Instead of putting 1,000intoonecoin,invest1,000intoonecoin,invest200 in five coins.
   • Adjust Based on Confidence: Allocate more to high-conviction trades.
     • Example: If you’re very confident in a coin, risk 3% instead of 2%.

Stop-Loss Strategies

1. What Is a Stop-Loss?
   • Definition: An order to sell a coin if it drops to a specific price, limiting losses.
   • Why It Matters: Protects your capital from significant downturns.
2. How to Set Stop-Loss Orders:
   • Percentage-Based: Set a stop-loss at a fixed percentage below your entry price.
     • Example: If you buy a coin at 1,setastop−lossat1,setastop−lossat0.90 (10% loss).
   • Support Levels: Set a stop-loss below key support levels.
     • Example: If a coin’s support level is 0.80,setastop−lossat0.80,setastop−lossat0.75.
   • Trailing Stop-Loss: Automatically adjusts as the price moves in your favor.
     • Example: Set a trailing stop-loss at 10% to lock in profits.

Take-Profit Strategies

1. What Is a Take-Profit?
   • Definition: An order to sell a coin when it reaches a specific price, locking in profits.
   • Why It Matters: Ensures you don’t miss out on gains.
2. How to Set Take-Profit Orders:
   • Fixed Targets: Set take-profit levels at 2x, 5x, or 10x your entry price.
     • Example: If you buy a coin at 1,setatake−profitat1,setatake−profitat2 (2x).
   • Resistance Levels: Set take-profit levels near key resistance levels.
     • Example: If a coin’s resistance level is 1.50,setatake−profitat1.50,setatake−profitat1.45.
   • Scaling Out: Sell portions of your position at different profit levels.
     • Example: Sell 50% at 2x, 30% at 3x, and hold the rest for higher gains.

How to Protect Your Capital While Chasing Gains

1. Diversify Your Portfolio:
   • Why: Reduces risk by spreading investments across multiple coins.
   • How: Allocate capital to a mix of high-risk and low-risk assets.
     • Example: 70% in meme coins, 30% in stablecoins or blue-chip cryptos.
2. Use Risk-Reward Ratios:
   • Why: Ensures potential rewards justify the risks.
   • How: Aim for a risk-reward ratio of at least 1:2.
     • Example: Risk 100tomake100tomake200.
3. Avoid Over-Leveraging:
   • Why: Leverage amplifies both gains and losses.
   • How: Use low leverage (e.g., 2x-3x) or avoid it altogether.
     • Example: If you use leverage, set strict stop-loss orders.
4. Regularly Review Your Portfolio:
   • Why: Ensures your investments align with your goals.
   • How: Rebalance your portfolio monthly or quarterly.
     • Example: If a meme coin has grown to 50% of your portfolio, sell some to rebalance.