Recently, I’ve been chatting with some newcomers in the crypto space and found that many have fallen into traps when building their positions. The problem is quite simple— they all want to buy everything at once, thinking it’s more convenient, but this approach carries very high risks.

My experience over the years has shown that staggered position building is the right way to go. Why? Because making a decision all at once leaves no room for adjustment, whereas dividing your purchases allows you to buy at lower prices and spread out your costs. Most importantly, building positions in parts helps you avoid misjudgments caused by “trapping short sellers” or “trapping long buyers,” effectively managing risk while ensuring profits. Of course, this method works best in stable market conditions; during extreme volatility like sharp surges or drops, different strategies are needed.

Regarding specific methods for building positions, I usually use three approaches. The first is the index-based method, which involves increasing your buying intensity as the price drops, and decreasing it as the price rises, and vice versa. For example, if you divide your funds into 10 parts, you might buy 1 part on the first dip, 2 parts on the second, 4 parts on the third, so your accumulated position grows exponentially, so you need to be cautious with this approach.

The second is the pyramid method, which is similar but more moderate. The size of each subsequent purchase varies, generally following an arithmetic progression—either increasing or decreasing. For example, during a rally, you might buy 30%, 20%, 10%, decreasing each time; during a correction, the pattern reverses. This approach is especially suitable for capturing hot topics with strong momentum.

The third is the equal-division method, the most conservative approach—dividing your funds equally and entering gradually when the trend is favorable or when there are opportunities to add to your position. This method is particularly suitable for risk-neutral or risk-averse investors, especially effective in choppy markets for high sell and low buy strategies.

In practice, there are four key points to keep in mind. First, set your stop-loss below your cost basis, based on how much loss you can tolerate. You can loosen this in a bull market but tighten it in a bear market. Second, take profit at points where the momentum stalls or during pullbacks, but always above your cost basis. The historical low point is obvious—your average entry cost is your break-even point.

Honestly, there’s no absolute right or wrong in building positions; the key is to adjust flexibly according to market conditions and your risk tolerance. Many beginners rush to go all-in at once and end up trapped, which shows they don’t understand the core value of staggered position building. If you want to achieve steady profits in the crypto space, start by changing your position-building habits.