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If your funds do not exceed 500,000 and you aspire to quickly stand out in the digital currency field through short-term trading, please pay close attention to the following content. After reading, you may gain a sudden clarity on the essence of short trading!
Having passed my thirties, I have been in the investment world for a decade, six of which I have made a living by trading cryptocurrencies to support my family. Not having ventured into finance and professionalism remains a significant regret in my academic career. Since the beginning of college, I have developed a strong interest in stocks, finance, forex, and other fields through the online world. The intermingling red and green screens are like a palette of life, captivating me endlessly. With endless aspirations for the market, during my sophomore year, I resolutely opened an investment account and gradually entered the cryptocurrency space, where Bitcoin and other digital currencies came into my view. Thanks to a recommendation from a classmate, I gained a deeper understanding of this field and became increasingly interested, embarking on my investment journey from then on.
When I first entered the cryptocurrency space, I, like many newcomers, was obsessed with technical indicators, constantly reviewing historical data in an attempt to find patterns. I was enthusiastic about investing in low-priced coins or those that had significantly pulled back, believing they were safer. However, these perceptions of the market were one-sided and incorrect.
After experiencing ups and downs, I gradually realized that to quickly gain profits in the market, short-term trading is the way to go. Of course, the compound interest effect of medium to long-term investments cannot be ignored and should complement short-term trading.
My experience tells me: Do not let temporary profits cloud your judgment. Know that sustaining profits is the hardest challenge in the investment world. We must conduct thorough reviews and analyze the successes and failures of each trade—whether it was due to luck or skill. Only by establishing a stable trading system that suits oneself can we unlock the golden key to sustained profitability.
There is a saying that I still remember: 'If you do not occupy the ideological territory, it will be occupied by others.'
Today, I am willing to selflessly share the valuable insights I have accumulated during my cryptocurrency trading career. These insights are the essence of my ability to stand firm in the market long-term. As long as you study diligently, you will surely gain a lot, and your understanding of cryptocurrency trading will undergo a revolutionary change!
Many people do not know how to trade contracts and often get liquidated. I have summarized my thoughts and insights on contract trading from over ten years of cryptocurrency trading.
1. Contracts are essentially just a tool.
Before I started getting into contracts, I heard all sorts of different opinions; some people think contracts are like a flood beast, while others believe they are a money-making machine for the nouveau riche. But in reality, it’s just a tool; the key lies in how to use it. Typically, large funds use it for asset hedging, which is hedging risk, yet many treat it as a way to get rich quickly (I initially had such thoughts too). This is a zero-sum market; if someone profits, someone must lose. Coupled with the trading platform's commissions and possible market manipulation by big players, retail investors...
The situation can be quite difficult; saying that contracts are like a meat grinder is not an exaggeration. If you want to survive in this field, you must master the survival rules; only the fittest can survive.
2. When opening a position, be sure to set a stop-loss (please repeat this three times in your mind).
The stop-loss range can be between 1 to 100 points, specifically determined by the position ratio.
3. The so-called 'eternal profit method'
Set the stop-loss at the original price. First, use one-tenth of the position to test the waters. If the trend judgment is correct, continue to add to the position, then take profits during pullbacks. It sounds wonderful, but the reality is very harsh. First, judging the trend is extremely difficult; the market mainly moves in oscillations, and opportunities to capture one-sided trends are few and far between. Second, even if the judgment is correct, continuing to add to the position will raise the original opening price, and once a slight pullback occurs, it may trigger the original price stop-loss. The fees from frequent operations can also be astonishingly high. Although getting it right once can multiply the principal several times or even hundreds or thousands of times, doing so long-term ultimately just means working for the trading platform, with no sustainability, unless you earn a profit and leave immediately.
4. Beginners often do not like to set stop-losses.
I have also walked through this stage; once the emotion of loss aversion is amplified, it leads people to trade recklessly, thus expanding risks infinitely. Once the cash flow chain is broken, one can only watch as they get liquidated, and often this happens before you even realize it. What initially was just a desire to earn one-tenth of the profit ends up losing all the principal.
5. There are methods to make eternal profits in contracts, but definitely not something that newcomers can master.
Many people participate in contract trading to make big money with small funds, but to make big money, there are only two paths: one is to win by position size, which is to heavily invest; the other is to win by amplitude, such as during significant drops like 312 or 519, or substantial rises from 10K to 60K. To capture such amplitude markets, any analysis may be useless; there is only one method: do not take profits. The most brilliant profit-taking strategy is not to take profits, but this is extremely counterintuitive. Even 90 or 100 times could result in losses or break-even; I also cannot do this. With small positions, even with large amplitudes, you won’t make big money; with large positions and small amplitudes, it's also useless and more prone to liquidation. All those who make big money are experts in balancing position size and amplitude.
6. The market is ever-changing, just as soldiers have no constant tactics and water has no constant form.
The market always develops in the direction of least resistance; betting on trends and guessing sizes are essentially no different. No matter how much technical analysis you learn, it may be useless. Being able to read candlesticks and some basic things is basically sufficient. Technical analysis is not difficult; just remember this sentence: If the trend is upward, it will continue to rise; if the trend is downward, it will continue to fall; if it has risen a lot but only pulled back a little, it will rise higher; if it has fallen a lot but only rebounded slightly, it will continue to fall. The larger the cycle, the more effective this rule becomes. Understanding these will help you grasp the core rules of technical analysis.
7. The real way to make big money is definitely in the trend.
Conduct rolling operations within trends; there’s nothing wrong with using small positions for back-and-forth operations during oscillating markets, but if this trading habit develops, it will be hard to hope for wealth in this lifetime. Short-term trading, while quick to earn, is also quick to lose, and in the long run, what you earn may not even cover the commissions paid. If you think you are the chosen one, then go ahead and try, but be aware that losing money often starts from winning.
8. The timing of entry is very important; many losses occur because of the fear of missing out.
When there is no position, during a decline, wait for a rebound before opening a short position; remember not to chase the decline. During an uptrend, wait for a pullback before entering; do not chase the rise. Doing so may cause you to miss some strong trend markets, but most of the time it will be safer. However, many people only see profits and fail to recognize risks, and in the end blame others for their missed opportunities.
9. Do not be afraid.
Many people are afraid of losing money in the futures market and no longer dare to open positions. When they trade again, they become hesitant and indecisive. Losses can lead to too strong a purpose, too much desire for results, always thinking about making profits, and constantly wanting to avoid losses. This mindset is not conducive to profitability. The ancients said, 'Do not rejoice in material gains, nor be saddened by personal losses.' In the trading field, this can be interpreted as: do not rejoice at profits nor be saddened by losses. When your heart is calm enough, you will achieve something. Go ahead and open positions with the passion and zeal you had on your first day in futures trading; do not be afraid of wolves in front and tigers behind. If wrong, stop-loss; if right, hold firm. Do not rush to exit before the trend reverses, or you will only miss the opportunity.
10. Passion.
Regardless of what you have experienced, maintain passion and enthusiasm, holding onto a beautiful outlook on life. Approach your work with the determination you had on your first job, and love boldly as you did in your first relationship. Many things in life are like this; whether in career or romance, there might not be an outcome, and the probability is high that there won't be. But if you do not strive or put in the effort, you will certainly achieve nothing. Just focus on doing what you need to do, and do not overly worry about the results.
11. Many people are constantly thinking about opening positions, even operating with full positions. For them, being out of the market is more painful than losing money.
In fact, the time for trend markets is often very short; controlling drawdowns is the most important. How to control drawdowns? Staying out of the market is the best method. Don’t always think about capturing every segment of the market; catching an opportunity once or twice a year is enough. Missing out is very normal, so there’s no need to regret. As long as you are still in this market and can survive long-term, there will be more opportunities in the future. Time is the only code for retail investors; maintain a calm mind, wait patiently, making money is just a byproduct, and enjoying life is fundamental.
12. The principles and insights of trading.
In trading, what’s more important is the mindset; knowledge is like techniques, while the mindset is inner strength. Just like Qiao Feng can defeat several Shaolin monks using the Taizu Changquan because he has deep internal strength. Being accurate doesn't have much use; what's important is what to do after being accurate, and what to do after being wrong, how to maintain composure in positions, how to have a good mindset, how not to fear missing out, and how not to fear drawdowns... If you always hold a mindset of wanting to win and fearing loss, it’s very hard to make money in this market. Some things newcomers may not realize right away, but as long as you spend enough time in this market, you will know these are truths!
I have survived through multiple bull and bear markets with some achievements! If you also want to learn in-depth! Want to take a share of this market! I will be your introducer!