I see many respondents say they are using 5x or 10x leverage, which is already quite low.
I am really speechless. In fact, I want to tell you all that you are wrong.
Leverage is not calculated this way at all. The leverage ratio calculated by the platform has nothing to do with you; it is roughly the proportion affecting the platform's safety. You should base your risk calculations on stop-loss or sufficient principal.
For such a volatile thing like crypto, it's fine to open positions evenly in batches, around 10-20% of the principal each time, with an overall position limit of about 2 (short) to 4 (long) times the principal. At the same time, the overall stop-loss risk at any given moment should be within 20% of the principal (or your psychological tolerance must be less than 20%). It is recommended to average risk over time at 10%, meaning there will be times when you are in cash positions... Some may ask, then why do contracts at all... Haha... I might offend the entire crypto circle by saying this, but do you really want to earn coins or make money? Is there a more flexible speculative tool than contracts? Is the U-based trading really useless? In the face of an impending bear market, which is safer, coins or USDT? When you spend money, do you spend coins or USDT?
Dear friends in the crypto circle, doing contracts (pure speculation) is completely different from investing in coins (similar to venture capital).
The essence of contracts is trading risk. Or rather, using risk management and expectations to make money.
When doing contracts, you must clarify this sentence.
You may not believe in technology, you may not believe in market makers, you may not believe in K-line averages, you may not believe in BTC, thinking they are all scams. You can also believe in these, but these conceptual issues will not hinder your ability to make money.
But there is only one thing you must understand, and that is [risk]: what is risk, how to manage risk, how to calculate risk, how to operate risk, how to withdraw from risk... how to survive...
------- You can't earn money beyond your cognitive range... Originally, if you invest in a coin and its value doubles, you earn 100%; then if you do contracts with 3x leverage, you end up earning 300%. So where does that extra money come from, whose money is it, do you know?
—— For contract trading, the money earned is actually the money from risk management, which is the money given to you by others' losses and liquidations. To get this money, first, you must not get liquidated...
In fact, viewing the market from a true [risk] perspective is completely different from how ordinary people view the market. It's like looking at a mountain from the bottom versus a panoramic view from the top; they are not the same thing at all. To give a casual example, people who buy coins can hold positions and wait for a rise, endure losses and focus on patience... But when doing contracts, if you hold positions and wait while enduring losses, you probably won't survive the first three episodes.
So, operations based on [risk] management are completely different from operations based on [dreams]. In the trading market, dreaming costs money, while those who manage [risk] strive to take that money.
So, do you want to be a [dreamer] or a [risk manager]? It depends on yourself. However, [dreamers] should not play contracts; doing contracts can shatter dreams built over years within days, and waking up from that is too fast.
Anyone who has made a lot of money will feel at some point: 'That period was almost like picking up money.' Close enough, but—when your opportunity comes, that is, when it’s your turn to pick up money, you have to be alive and have the capital to pick it up.
Yes, earning money from contracts is not difficult... After all, there are so many people who get liquidated and give money away. They are racing on the edge of a cliff, and you just need to wait at the bottom of the cliff, picking up a few parts to get by.
The difficulty lies in the fact that it is inherently counter to human nature. Basically, you have to think in the opposite direction of ordinary people's thoughts like 'get rich overnight.' Whenever you are eager to increase your position or open a position, you need to think about what it means to 'go against human nature.'
… If buying coins is like fishing, then doing contracts is like stepping into the boxing ring... This is why I say there is a lot of time spent in cash positions, which is completely normal. Waiting, testing, retreating, trying again, waiting again... this is the norm for successful speculators.
In fact, strategies over a period of time are almost always simple and clear, and it can be said that everyone knows them.
For example, on February 14, 2022, many teams' operational strategies are: shorting most coins while timing a long position on BTC as a hedge.
I won't elaborate on the reasons; just think of yourself as a big player in the crypto circle and deduce accordingly. With such an absolutely profitable strategy, 80% of the people operating contracts still won't make money.
And such a simple strategy actually contains countless details. For example, the simplest operating principles, why not short based directly on BTC, why shorting is much more conservative than longing, and much shorter in holding time, how to handle stop-loss in shorting, how to short various technical coins... Regarding contract stop-loss schemes, it requires theory, is worth learning, and the value of stop-loss theory is at least half of what you invest in contracts. If you really can't find it, you have to derive one yourself (that's what I did, found someone, they weren’t willing to teach, so I derived a set myself). A complete set of theories means a complete set of operations, and strict execution will always bring opportunities.
That's how trading is; on the surface, it seems extremely simple, just buying and selling (one minute on stage), but behind it, countless people have put in the effort (ten years of work off stage)... Overall, this is a profession. It's not that beginners can't do it, but you must study and train seriously before you can truly get in the game.
I often compare flying a plane to speculation. The reason is that the two are quite similar; forcing yourself to fly without knowing how will result in disaster, and forcing yourself to speculate without knowing how will inevitably lead to liquidation.
And risk management, stop-loss management, is equivalent to the most basic skills of flying a plane. With this, you can at least ensure that you won't die.
Still the same saying, bulls have their strategies, bears have their play styles, while steady traders aim for victory with stable and steady approaches. If you want to eat meat, focus on your main business and get on the bus quickly!
Continuously pay attention to BTC, ETH, BNB.
