Contracts are a scourge for most people, but a tool for wealth for a small number. If you want to trade contracts, first understand the following content.
1. Assume the probability of liquidation is 0.1%; after 1,000 trades, the total probability of liquidation reaches 63%, and after 2,000 trades, it reaches 87%. The probability of liquidation is merely a theoretical assumption. In actual operation, because price movements usually follow a normal distribution, as leverage increases, the probability of liquidation grows exponentially, meaning that the probability of liquidation at 10x leverage is much greater than at 5x leverage.
2. Assuming a transaction fee of 0.1% each time, a win rate of 50%, after 1,000 transactions, the principal would most likely go to zero.
3. Assume you have $10,000; if you make a profit of 50% on the first trade and then lose 50% on the second, you will have $7,500 left. If you lose 50% on the first trade and then gain 50% on the second, you still have $7,500 left. If you lose 90% in a trade, you need a 900% gain to break even.
As for the methods of position splitting and stop-loss lines, there is essentially no difference between the two; both reduce risks while also reducing profits.
4. In the spot market, 10% of retail investors can profit, while in the contract market, only 3% of retail investors can profit.
There are about three types of people who profit from contracts:
1. Small capital short-term trading, relying on win rate to make money. Strict discipline is required; once you make money, you should withdraw it.
2. Relying on risk-reward ratio to make money, with a win rate below 50%, but earning more than losing leads to big profits.
3. Relying on rolling positions, like Tony turning $50,000 into millions, a lunch dogecoin increasing by 400 times, and a female college student shorting Luna to earn millions, and Liang Xi turning $1,000 into ten million, all achieved through rolling positions.
I have played all three types and went from entering the crypto world with $8,000 to millions. Below, I will share how I did it:
If you want to treat cryptocurrency trading as a second source of income, want a piece of the pie in the crypto world, and are willing to spend time growing and learning, then don't miss this article. Read it carefully; every point is the essence of the crypto world.
It can be said that whether in a bull or bear market, these 'must-follow trading iron rules' can help you! Later, I will also talk about the essential tool for Bitcoin trading - BOLL, which can determine whether it's a bull or bear market. If used well, increasing by 30 times in a month is quite simple!
Before each trade, everyone must first ask themselves three questions:
First, think about the reason for opening each position.
Second, do you often find that your profitable positions turn into losses?
Third, do you often hold positions until liquidation and don't know what to do? These three questions are unavoidable for everyone who trades. Cryptocurrency friends have encountered them to some extent; everyone goes through this, especially beginners, who are often very blind. The essence lies in their failure to establish mature trading thinking and a trading system.
What is a trading system? It is a self-methodology for trading, opening positions, closing positions, increasing positions, decreasing positions, taking profits, and stopping losses; in other words, it is a set of rules of your own. Having such a system's most direct benefit is that all your trades are justifiable, significantly reducing the chances of making mistakes and the amount of losses. Secondly, you don’t need to watch the market in real-time; strictly executing according to the system means you have a clear understanding of your targets and losses, allowing you to be steady regardless of market fluctuations.
So how to establish your own trading system? The most important thing is to have a good mindset. The crypto world is a market that can be traded 24 hours a day, with unpredictable market conditions and huge fluctuations. You need to have strong psychological qualities when trading. A person's trading habits, psychological endurance, strategy execution ability, and ability to overcome greed and fear vary, which determines that everyone has a different trading system that suits them.
From my long-term summary, an excellent system must include the following characteristics:
First, the frequency of opening positions should not be too high. There are too many people in the crypto world eager to get rich, feeling that if they don't open a position for a day, they will miss out on the imagined big market. In fact, opening positions should depend on the market situation, not time. Blindly opening positions without market conditions only leads to losses. There are many opportunities in the crypto world, but the vast majority are not within your reach, and no one can capture every fluctuation. 'Waiting' is key; learn to wait, seize your opportunities, reduce the frequency of your stop-loss orders, and your profits will naturally show a significant increase.
Second, overcome greed. Greed is the most taboo thing in cryptocurrency trading, especially in contracts. The market fluctuates daily; with every rise, there is bound to be a fall. I have seen too many people who, because of greed, do not take profits from a doubling position, resulting in losses and even liquidation.
Third, strictly take profit and stop-loss. This is the most important operation in contracts and a major reason why I have achieved the highest return rate of 11,570.96%. Before analyzing the market and opening positions, always consider the take-profit and stop-loss points, especially the stop-loss position. Calculate whether the risk-reward ratio is worth making the trade. When you think it’s feasible, set these two positions. No matter how the market fluctuates, you will remain steady; strictly follow the stop-loss position to protect your principal, and take profits gradually at the take-profit point to lock in profits.
Fourth, control the position size when opening trades. Why is position control important? A simple calculation can make it clear: if you earn 20% on one trade and lose 20% on another, with an accuracy of 50%, repeating this 40 times can halve your assets, and accounting for transaction fees leaves even less; the result is definitely asset zero. Therefore, it is crucial to manage position sizes well. Maintaining fixed capital is a good choice, and withdrawing profits is an excellent habit because what you withdraw is truly yours; what remains in the exchange is just unrealized gains.
Fifth, practice and review summary. Once you learn to control your mindset, position, funds, and K-line operation techniques, you still lack the most critical and essential step to build your own system, which is to practice and summarize. Practice brings true knowledge, and reviewing can lead to improvement.
Reviewing should be done for every trade, and weekly reviews are essential. Notes and real trading can help everyone review and summarize, enrich their reasons for opening positions, and refine their take-profit and stop-loss points.
A trading system is not built overnight; it must be summarized through continuous practice of opening positions. No one is born understanding K-lines or contracts; everyone learns and summarizes through constant exploration. Who hasn't lost money and paid tuition fees? The important thing is that the tuition cannot be paid in vain; learning from mistakes helps you gain wisdom, absorbing experience from failed trades means that in similar situations next time, you will naturally know what not to do and what to do.
I am Chef Huang. If you have been investing unsuccessfully recently and can't understand the overall trend, and the market keeps going against you!
Welcome to find me! I'm a professional copy trader! I will help you grasp this wave of the upcoming bull market!
