Did you know? Many trading experts ultimately fail not because they misjudge the market, but because they can't control their positions.

Position management is like a trader's "life and death register." It determines how long you can survive and how much you can earn. Some people can accurately predict market directions, but due to over-leveraging once, they vanish in an instant. Conversely, others may not always be right, but because of strict position discipline, they can achieve stable profits. This is not luck; it's mathematics.

**Why can pyramid averaging make money?**

It's simple — it follows an iron law: be cautious before confirmation, greedy after confirmation.

First, when you see a new trend signal, don't rush to go all-in. Use 10%-15% of your total funds to test the waters. This is your "ticket" — verifying your judgment at the lowest cost.

Next? When the price truly moves as you expected, breaks through a key resistance level, or successfully rebounds at a support level, then it's worth adding to your position. But the amount should be smaller — for example, 8%. Why? Because you've already made a profit on the first trade, and this additional position is using the earned money to amplify gains.

Each subsequent addition should be even smaller — 5%, 3%... or even less. The beauty of this approach is that your average entry cost remains in the most advantageous position. Even if the market experiences a normal pullback later, you won't be wiped out by over-leveraging on the last position.

**Why shouldn't you do the opposite?**

Some say, "I make small profits first, then increase my position at the end of the trend — isn't that more profitable?"

Wrong. This is "inverted pyramid averaging," the king of liquidation in crypto circles. It seems logical, but in reality, it's a ticking time bomb. When the market peaks and declines, your largest position is precisely in the most dangerous spot. A correction can wipe out months of profits.

Even more terrifying is averaging down on losing positions. Some say, "I’m bearish on this coin, but it rises, so I keep adding short positions to lower my average cost." That's a death trap. The market has already proven you're wrong with action, yet you keep adding to fight the market — this is not courage; it's suicide.

**What does the math say?**

The Kelly Criterion gives us a scientific answer. It can precisely calculate how much position size each trade should have based on your historical win rate and risk-reward ratio. This is not gambler's intuition; it's the cold truth of probability.

A common scenario: suppose your win rate is 60%, and your single trade profit is twice your loss. The Kelly formula will tell you — the optimal position is 20% of your total funds. Going beyond this number will actually decrease your long-term returns. That’s why even Warren Buffett, confident as he is, never goes all-in.

**Final words**

Position management is about balancing "not losing everything" and "maximizing gains." Doing pyramid averaging right creates a stable money-making machine. Doing it wrong — inverted pyramid, averaging down on losses — is a shortcut to rapid bankruptcy.

The choice is in your hands.