I've been in the cryptocurrency world for ten years; six years ago, I quit my job to trade cryptocurrencies. From being in debt to becoming wealthy, I also frequently faced liquidation in the beginning.

What truly changed me was a night five years ago. Something an elder said to me struck a chord, helped me correct my position, and understand the eight stages every cryptocurrency enthusiast must go through. I continually compare myself to that, using it as a mirror, and finally got back everything I lost!

Perhaps in the eyes of some, retail investors are always the lambs waiting to be slaughtered!

If you are preparing to enter the cryptocurrency market, I sincerely hope this article can help you. As someone with decent summarizing abilities and expression, I believe some of my thoughts might be helpful to you. Alright, enough small talk, let’s get straight to the point~




Avoid the solid, strike the virtual, know and act as one.

If you want to reverse your fate in the traditional speculative market, it comes down to: buy early, buy low, buy more. In the cryptocurrency world, rolling positions is almost the only way to make a quick comeback.



One, the three applicable situations for rolling positions

Rolling positions sounds scary, but actually, if you put it another way, it’s adding positions with floating profits.

This sounds much better; adding positions with floating profits is just a common technique in futures trading.

You don't need to maintain 5-10 times leverage; just two or three times is enough. What you need is to maintain floating profits and keep total positions at two or three times. Trading Bitcoin is relatively safe; rolling positions are only suitable in three situations:

  1. Choosing a direction after a long period of sideways volatility at a new low

  2. Buying the dip after a big drop in a bull market

  3. Breaking through significant resistance/support levels on a weekly basis

You only have a better chance of winning in these three situations; all other opportunities should be abandoned.

(Tip: Only use money you don't mind losing to play futures.)

Fatty's perspective:

Let's define rolling positions: in a trending market

In the middle, after significantly profiting using leverage, due to an overall passive drop in leverage, increase trend positions at the right time to achieve compounding profit effects.

The process of increasing positions is called rolling positions.

In the definition of 'the right time', I think there are mainly two situations:

1. Add positions during a converging breakout in a trend; after breaking out, quickly reduce the added positions during the main upward wave.

2. Add trend positions during the correction phase in a trend, such as buying in batches during a moving average pullback.

Two, the risks of rolling positions

Let's talk about rolling positions. Many people think there is risk involved; I can tell you that the risk is very low, far lower than the logic of opening positions in the futures you are playing.

If you only have 50K, how do you start with 50K? First, this 50K should be your profit. If you're still losing, then don't even look.

If you open a position at 10K for Bitcoin, and set the leverage to 10 times, using the isolated margin mode, you only open 10% of the position, which is 5K as margin, that actually equals 1 times leverage. With a 2% stop-loss, if you hit the stop-loss, you only lose 2%, just 2%? 1,000 bucks. How do those who get liquidated actually get liquidated?
Even if you get liquidated, okay? Isn't it just a loss of 5K? How could you lose everything?

If you are correct and Bitcoin rises to 11K, you continue to open 10% of your total capital, similarly setting a 2% stop-loss. If you hit the stop-loss, you still make an 8% profit. Where's the risk? Didn't someone say the risk is huge?

And so on...

If Bitcoin rises to 15K, and you add positions smoothly, in this 50% market move, you should be able to earn around 200K. Catching two such market moves would mean about 1 million.

There is no such thing as compounding; 100 times is achieved through two 10 times, three 5 times, or four 3 times, not by compounding 10% or 20% every day or month; that’s nonsense.

This content not only has operational logic but also contains the core inner workings of trading, position management. As long as you understand position management, you can never lose everything.

This is just an example; the general idea is like this, but the specific details still need to be pondered over by yourself.

The concept of rolling positions itself has no risk; not only is there no risk, but it's also one of the most correct mindsets for trading futures. The risk lies in leverage. You can roll with 10x leverage, or even 1x. I generally use two or three times leverage; catching a couple of good trades can yield dozens of times returns, right? If not, you can use 0.x leverage. What's that got to do with rolling positions? This is clearly a matter of your own choice in leverage; I have never said to use high leverage for trading.

Moreover, I always emphasize that in the cryptocurrency world, you should only invest one-fifth of your money, and only one-tenth of your cash into futures. In this period, the funds for futures only account for 2% of your total funds, and futures should only use two or three times leverage, and only trade Bitcoin, which can be said to reduce risks to an extremely low level.

Would you feel heartbroken if you lost 20K out of 1 million?

If it’s always leveraged, it loses its meaning. People keep saying rolling positions are risky, and that making money is just luck. I’m not saying this to convince you; convincing others is meaningless. I just hope that those with similar trading philosophies can play together.

Currently, there is no filtering mechanism; there are always harsh voices appearing, interfering with the recognition of those who want to see.

Three, trading principles

There is a very important principle in trading: do not make small profits, do not incur big losses.

Simply put in eight words, it’s actually very difficult to achieve. For example:

You opened a position at 20K, and after opening, it rose to 21K. You're very happy, took profits, made 5% and felt great, but then the market kept rising to 25K... You made 5% but missed out on 50%;

Then you tell yourself to make big money; this time, you will resolutely not take profits. Then the market returns to 20K, and you open another position. After that, it rises to 21,000. You remind yourself to learn from the last lesson and hold on to make big money. The result? The market returns to 20K and even drops below 20K to 19,500. You stop-loss.

I'm finding it so hard!

Many people spend their whole lives caught in such dilemmas, never finding a way out.

Is there a way to earn from both big and small markets?

No, you must choose one; I generally choose not to make small profits.

What I'm saying here I can't do 100%, and no one can do it 100%, but I can tell you the correct philosophy. How much you can achieve depends on individual cultivation. Each of us can only achieve a certain proportion of these philosophies, and we should try our best to improve that proportion.

Four, the mindset for trading rolling positions

Whether you're trading short or long, if you make 200% in a big market move, as long as you can maintain most of the profits, you can make 200% again the next time you encounter a big opportunity, which makes it 4 times... As long as you can preserve profits, you can compound them. If you make 200% this time and then lose it back, what’s the point? In the trading market, there is no such thing as missing out; there are only losses and gains.

Some people might feel they found the right path and think they are about to get rich.

Touching the path only indicates that your chances of making money have increased.

In fact, this kind of operation requires a high level of mentality, patience, and courage.

1. Are you willing to patiently wait for a good position?

2. Better to miss an opportunity than to make a mistake; when there is significant profit in your position, are you willing to give up the profit to continue holding?

3. Can you boldly open positions without caring about the principal, even if you lose everything?

The anxiety of missing out, the urgency to secure profits after gaining, the worry of losing after opening a position...

It takes a long time to cultivate; if you want to play, be cautious and also try to make profits.

Of course, finding the path is still much better than those who play blindly; many people go their whole lives without finding the right path.

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