---
title: "Position management notes"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/36804524.md"
description: "Losses are non-linear: a 10% loss requires an 11% gain to break even; a 20% loss requires a 25% gain; a 50% loss requires a 100% gain; a 90% loss requires a 900% gain. Survival comes first, profit second. Without position management, one extreme market move can leave you deep in the mud. Common newbie mistake: going all-in to chase a quick turnaround, but the market has no 100% certainty. Even with a 70% win rate, you could lose 10 times in a row and go bankrupt. It's recommended to build positions in batches, using trial and error to control drawdowns. Example of batch position-building: assuming the fair price of the asset is 10 yuan..."
datetime: "2025-11-29T13:26:24.000Z"
locales:
  - [en](https://longbridge.com/en/topics/36804524.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/36804524.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/36804524.md)
author: "[巴菲Te北京分特](https://longbridge.com/en/profiles/897160.md)"
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/topics/36804524.md) | [繁體中文](https://longbridge.com/zh-HK/topics/36804524.md)


# Position management notes

Losses are nonlinear: a 10% loss requires an 11% gain to break even; a 20% loss requires a 25% gain; a 50% loss requires a 100% gain; a 90% loss requires a 900% gain. Survival comes first, making money second. Without position management, one extreme market move can leave you deep in the mud.

**Newbie Pitfall: All-in Gambling**

Going all-in to chase a quick turnaround, but the market has no 100% certainty. Even with a 70% win rate, you could lose 10 times in a row, leading to bankruptcy. It's recommended to build positions in batches, using trial and error to achieve controllable drawdowns.

**Practical Case of Batch Position Building**

Assume the fair price of the asset is 10 yuan, currently fluctuating between 9-10 yuan. Divide the total capital into three parts (total position 60%):

• Step 1: Test position (30%), buy at 9.5-10 yuan. If wrong, only lose a small part; if it rises, you're already on board.

• Step 2: Add on dips (20%), buy at the 8-9 yuan support level to average down the cost.

• Step 3: Opportunistic buying (10%), buy if it falls below 8 yuan (e.g., 6 yuan).

Result: Cost reduced to 8.5 yuan. Maximum floating loss of 30%, rebounds to 8.5 yuan to break even, and a big profit at 10 yuan. Keep 40% cash for risk management.

**Risk Diversification: Low Correlation**

Holding multiple stocks doesn't mean diversification—if they're in the same sector (e.g., tech), a systemic sell-off will hit them. Allocate to low-correlation assets: tech + gold ETF + defensive stocks (e.g., utilities, healthcare). Elasticity in uptrends, cushion in panics.

**Position Management**

• Bull market: Pyramid adding. Base position 30%; add 20% on breakout; add 10% on strength. Control costs, ride the main uptrend. Shift to profit-taking when momentum stalls.

• Bear market: Inverse pyramid approach. Only for quality stocks, start with 10% observation; add 15% on dips; add 20% in panic. Set maximum loss, cut if breached.

**Breaking Bad Habits**

1\. Refusing to admit mistakes, averaging down beyond plan: Exit when stop-loss is triggered.

2\. All-in on rumors: Use 5% to verify, add more only after confirmation.

3\. Time for space: Trapped capital is better shifted to safe assets. Don't cling to a sinking ship.

Conclusion: Respect the market, save bullets for critical moments.

### Related Stocks

- [FL2CSOPGOLD (07299.HK)](https://longbridge.com/en/quote/07299.HK.md)
- [SPDR® Gold Shares (GLD.US)](https://longbridge.com/en/quote/GLD.US.md)

## Comments (1)

- **赚不尽亏得完 · 2025-12-01T01:12:01.000Z · 👍 1**: 🫡