Don’t understand contracts? Come, let me clarify everything for you today!
Although I have always advised everyone to stay away from contract trading, especially beginners, I understand that many people cannot resist the temptation of 'small bets for big returns.' Since everyone keeps asking, today I will clarify contract trading for you, especially those details that often make people's hearts race, such as leverage+, full warehouse+, and partial warehouse+, take profit and stop loss+, etc.
Let's start with the most common BTCUSDT perpetual contract+. This contract is simply trading Bitcoin (BTC) against Tether (USDT), and it has no expiration date, meaning you can hold this position indefinitely until you voluntarily or forcibly close it (ahem, liquidation? Understand?).
What is leverage? Can we not let it kill me?
Leverage, as the name suggests, amplifies your funds. Just like moving a big stone with a small stick, leverage allows you to trade larger amounts with little money. For example, 5x leverage means you can control a $5 worth of Bitcoin transaction with 1 USDT.
Doesn't it sound exciting? But be careful! Leverage can amplify profits as well as losses. If the market moves slightly against you, you may lose even more money. Therefore, when choosing leverage, be sure to consider it carefully and avoid selecting too high a multiple. After all, most people who say 'those who play contracts well have two houses at home' are not just boasting.
What do full warehouse and single warehouse mean? Will they affect my returns?
On the Binance trading interface, you will see two options: full warehouse and single warehouse (also known as partial warehouse).
Full warehouse model: As the name suggests, all the funds in the account are considered. When losing, everyone shares the burden. If you open multiple positions and one position loses heavily, the platform will automatically take money from other parts of your account to support you until all your funds are lost. In this model, the risk is shared. Full warehouse is suitable for those who are bold and careful; they believe that using all the funds to withstand temporary fluctuations is manageable. However, if there isn’t much money in the account, the risk of liquidation is very high.
Single position model (partial position model): In contrast, a partial position is like opening a small 'independent vault.' You can allocate fixed margin for each position, and if one loses, only that portion is lost, without dragging down the entire account. This model is more suitable for conservative players; even if one position is liquidated, the other positions remain safe.
For example, if you have 1000 USDT in full warehouse mode, and one position loses, the platform will automatically use this 1000 USDT to support you. In partial position mode, you can allocate 500 USDT for each position; if one position loses all, it won't affect the funds of the other positions.
Take profit/stop loss? How should I set it to avoid dying too embarrassingly?
Take profit and stop loss, as the name suggests, help you set your expected profit or loss in advance, allowing the trading platform to automatically close positions when these prices are reached. This is to prevent the market from suddenly changing, causing you to lose everything without a chance to act.
Take profit: When the price reaches the high point you set, the system will automatically sell for you, locking in profits.
Stop loss: When the price falls to your set bottom line, the system will help you stop loss in time to prevent further losses.
However, the settings for take profit and stop loss should not only look at the latest price but also consider 'mark price+'
What is the difference between mark price and latest price?
Latest price: This is easy to understand; it's the most recent transaction price in the market, fluctuating every second. If you are more concerned about real-time market fluctuations, you can usually use the latest price to set take profit/stop loss. This way, as long as the latest transaction price reaches your set point, the system will automatically close your position.
Mark price: The mark price is somewhat complex; it is a smoother and more stable reference price calculated by the platform based on market price, funding rate+, and other factors. Its existence is to avoid unnecessary liquidations due to severe price fluctuations in a short time.
You can think of the mark price as the platform's 'psychological price,' which is generally more stable than the latest price. If you don't want to be 'killed' by short-term market fluctuations, you can refer to the mark price to set your take profit and stop loss.
For example, you set a stop loss order to sell when Bitcoin drops to 63200 USDT. If set using the latest price, when the latest price reaches 63200 USDT, the system will immediately sell for you. But if the market suddenly has a significant fluctuation, you may be closed out even before this price. If you set the stop loss using the mark price, it can be more stable during large fluctuations, preventing 'false drops' from washing you out.
Take profit/stop loss? How should I set it to avoid dying too embarrassingly?
Take profit and stop loss, as the name suggests, help you set your expected profit or loss in advance, allowing the trading platform to automatically close positions when these prices are reached. This is to prevent the market from suddenly changing, causing you to lose everything without a chance to act.
Take profit: When the price reaches the high point you set, the system will automatically sell for you, locking in profits.
Stop loss: When the price falls to your set bottom line, the system will help you stop loss in time to prevent further losses.
However, the settings for take profit and stop loss should not only look at the latest price but also consider 'mark price+'
What is the difference between mark price and latest price?
Latest price: This is easy to understand; it's the most recent transaction price in the market, fluctuating every second. If you are more concerned about real-time market fluctuations, you can usually use the latest price to set take profit/stop loss. This way, as long as the latest transaction price reaches your set point, the system will automatically close your position.
Mark price: The mark price is somewhat complex; it is a smoother and more stable reference price calculated by the platform based on market price, funding rate+, and other factors. Its existence is to avoid unnecessary liquidations due to severe price fluctuations in a short time.
You can think of the mark price as the platform's 'psychological price,' generally more stable than the latest price. If you don't want to be 'killed' by short-term market fluctuations, you can refer to the mark price to set your take profit and stop loss.
For example, you set a stop loss order to sell when Bitcoin drops to 63200 USDT. If set using the latest price, when the latest price reaches 63200 USDT, the system will immediately sell for you. But if the market suddenly has a significant fluctuation, you may be closed out even before this price. If you set the stop loss using the mark price, it can be more stable during large fluctuations, preventing 'false drops' from washing you out.
Opening positions, closing positions, going long, going short, confused?
These are all terms in trading. It's actually simple; let's break it down:
Opening a position: Opening a position means establishing a new position, deciding whether to buy or sell.
· Going long: You expect the price to rise, so you buy the asset (like Bitcoin) and wait for it to rise before selling; this is going long. · Going short: You expect the price to fall, so you borrow the asset to sell, then buy it back when the price drops to return it; this is going short.
Closing a position: Simply put, it means ending an already opened position; closing a long position means selling what you bought, while closing a short position means buying back what you borrowed to sell.
Funding rate/countdown, what does it mean?
The funding rate is a unique mechanism of perpetual contracts, where longs and shorts pay each other a fee every eight hours. If the rate is positive, it means longs pay shorts; if negative, it means shorts pay longs. This is a way for the platform to adjust the market supply and demand, preventing the market from becoming one-sided.
Countdown refers to the time for the next funding rate settlement. When the countdown ends, if you hold a position, you will either pay a fee or receive a fee, depending on whether you are long or short.
After listening to me ramble so much, you may have gained some new insights into contract trading! Although it seems appealing, the risks are equally enormous. Leverage gives you the opportunity to bet small for big returns, but it can also lead to losing everything. Therefore, cautious trading and proper risk control are the key.
After over 10 years of cryptocurrency trading, accumulating small funds into large ones relies on contracts. In a year, I turned 200,000 into over 80 million through contracts. Contracts are indeed not meant for ordinary people!
Guide to surviving cryptocurrency contracts: Explosive! 90% of people don’t know the secrets to avoiding liquidation.
Guide to surviving cryptocurrency contracts: The secrets to avoiding liquidation with a $5000 principal.
In the ever-changing world of cryptocurrencies, contract trading attracts many investors with wealth dreams due to the potential high returns brought by high leverage. However, high returns always come with high risks. For investors planning to enter the cryptocurrency contract market with a $5000 principal, every step must be taken carefully, as any misstep may lead to total loss. The following key points are crucial to avoid liquidation and achieve steady investments in the cryptocurrency contract market.
Plan funds reasonably, strictly adhere to the safety bottom line.
Capital allocation is the first gate of contract trading, directly determining the risk tolerance of the trading. When using a $5000 principal, it is essential to strictly control the opening capital. It is recommended to use at most $500, that is, 10% of the principal for opening positions. This is like in a battle; you cannot send all your elite troops to the battlefield at once; you need to leave some strength to deal with various emergencies. The remaining $4500 should be reserved as emergency funds for additional positions when needed. Going all in at once is equivalent to betting everything; if the market trends go against your expectations, you will be in a desperate situation with no chance of recovery.
Focus on mainstream currencies to avoid potential risks.
When selecting a cryptocurrency, maintain a clear mind. Bitcoin, as the leader of digital currency, has high market recognition and strong liquidity, with relatively more regular price movements. In contrast, altcoins often lack solid value support, making their prices easily manipulated by whales and leading to extreme volatility. Many investors fall into the trap by greedily trying to cover various altcoins, eventually stepping into 'minefields.' For example, some people blindly followed the trend to long some unknown altcoins, resulting in a sudden crash with no warning, leading to heavy losses. Therefore, focusing on Bitcoin for contract trading can reduce risks to some extent.
Set stop loss defenses to protect your investment principal.
Setting a stop loss when opening a position is crucial for survival in cryptocurrency contract trading. Market conditions change rapidly, and no one can accurately predict every price fluctuation. A stop loss acts as a 'fuse' for your investment account; when the price hits the preset stop loss level, it automatically closes the position to limit further losses. It is important to adjust the stop loss distance based on the real-time volatility of the market. If the stop loss distance is set too close, it may be triggered frequently due to normal market fluctuations, leading to unnecessary losses; if set too far, it may not provide timely protection when risks arise. Investors should not be overly optimistic, believing that the price will reverse in their expected direction without setting a stop loss, as this mindset often leads to greater crises.
Develop an increasing position strategy to achieve steady profits.
Increasing positions is an art that requires careful planning. In contract trading, the remaining principal should at least ensure that you can add positions four times. During the process of increasing positions, gradually increase the amount added. By doing so, the average holding price is lowered, allowing for profits when prices rebound. For example, when the price drops after the first position is opened, follow the plan to make the first additional position with an increased amount compared to the initial opening. As the number of additional positions increases, the average holding price will gradually decrease. When the market trend reverses and rises to a certain level, profits can be realized. However, adding positions must be based on an accurate judgment of the market trend; blindly increasing positions will only lead to larger losses.
Enhance capital management and control the level of risk.
In contract trading, capital management is crucial. The risk of a single trade should be strictly controlled at 2%-5%. If the risk is set too high, when market trends go against you, the retracement of account funds will be significant. This not only severely impacts the investor's funds but also easily disrupts the investor's mindset. Once the mindset collapses, subsequent trading decisions often become blind and impulsive, further increasing losses. Therefore, rationally controlling the risk of a single trade is key to maintaining trading stability and sustainability.
Refine your trading system and accumulate practical experience. A complete trading system is not achieved overnight; it requires investors to continuously accumulate experience, summarize lessons, and optimize and improve it over a long period of trading practice. In the early stages of trading, investors should not rashly invest large amounts of money but should explore with small funds. By trading with small funds, they can familiarize themselves with the market's operating rules, understand response strategies under different market conditions, and test whether their trading ideas and methods are feasible. In this process, they should constantly summarize successful experiences and lessons from failures, gradually perfecting their trading system. Only when the trading system has undergone multiple practical tests and can maintain stable profitability in different market environments should they consider increasing their investments.
Enhance execution and strictly adhere to trading discipline.
Execution is one of the key factors determining the success or failure of contract trading. During the trading process, investors must strictly follow the stop-loss plan, regardless of how complex the market situation is, and must not give up the stop-loss due to momentary hesitation or luck. At the same time, they must resolutely avoid the behavior of counter-trend bottom fishing. Once the market trend is formed, it often has strong inertia; counter-trend actions are like trying to stop a moving truck, with very low success probabilities. Also, do not attempt to gamble on low-probability events; the uncertainty in the market is significant. Events that seem to happen by chance, once they occur, often lead to devastating impacts.
Exclusive strategy for small retail investors, proceed cautiously.
For small retail investors with relatively limited capital entering the circle, caution is even more necessary when participating in cryptocurrency contract trading. First, it is recommended to use funds that, if lost, will not have a significant impact on their lives, thus alleviating psychological burdens and avoiding overly worrying about losses affecting trading decisions. Secondly, choose low leverage of 2-3 times; although low leverage has relatively limited returns, it effectively reduces risk. Combine with larger cycles for capital planning, focusing on larger cycles like 1-hour, 4-hour, or daily levels. Price movements in larger cycles are relatively more stable, less affected by short-term fluctuations, which helps investors grasp market trends more accurately and make reasonable trading decisions.
Contract trading in the cryptocurrency world is like sailing in a turbulent sea, with enormous risks. Investors must always remember the principles of light positions, following the trend, and setting stop losses. They should remain rational and avoid blindly following trends or impulsive trading. Only in this way can they minimize the risk of liquidation and achieve steady asset appreciation amidst the waves of contracts.
I have talked many times about 'breakout trading,' which is an effective method to quickly follow new trends. The best breakouts usually occur when the price breaks through a very obvious resistance level, a level that many market participants are watching. At this time, market momentum tends to increase sharply, attracting more buyers to enter, pushing the price further up.
However, capturing these breakouts is not as easy as it seems. In this article, we will discuss four different methods of entering breakout trades, each with its pros and cons.
Remember to choose the method that best suits your trading style to improve the probability of success!
How to enter breakout trades?
Determine the breakout level.
Traders first need to determine the key price levels or technical indicators for the breakout. This can be a trend line, moving average, or resistance level.
Option 1: Buy before the breakout.
Buying before an actual breakout occurs is entirely possible, known as 'preemptive breakout.' However, there is no doubt that this method carries greater risks than the other options discussed below.
If you decide to adopt this method, ensure that you only select those stocks or varieties that show strong momentum and have increased trading volume before the breakout.
The main advantage of this method is that if the breakout does occur, you will profit quickly because you anticipated the breakout. However, the breakout may ultimately not happen, or it may fail.
Traders using this strategy typically start with light positions for testing, then buy again during or after the breakout to build multiple positions.
Entry and stop loss.
Buy when the price is still in a consolidation phase. The initial stop loss is usually set below the trading channel.
Option 2: Buy during the breakout.
Buying during a breakout ensures that an effective breakout has actually occurred. For this option, momentum and trading volume should be closely monitored. Stronger momentum and higher trading volume are early signals of increased buyer interest. This is much more likely to succeed than preemptive breakouts.
Similar to option 1, buying during a strong breakout offers the chance for quick profits.
However, there remains the possibility of a false breakout. On the daily chart, false breakouts typically appear as prices break during the trading session but the closing price ultimately falls below the breakout level.
In this case, traders need to decide whether to continue holding (assuming the breakout will ultimately occur) or to close immediately and wait for the price to attempt to break out again.
Entry and stop loss.
Once the price breaks through a confirmed breakout level, buy immediately. The stop loss can be set below the last candlestick (aggressive) or below the range of consolidation (conservative).
Option 3: Buy after the breakout.
Option 3 is a more conservative strategy, but its advantage lies in providing higher certainty. Not only has the breakout occurred, but the closing price at the end of the trading day is also above the breakout level, confirming the breakout. Therefore, this eliminates the possibility of an intraday false breakout.
A major drawback of waiting for a confirmed breakout is that you may miss a significant portion of the price surge. Breakouts of 10%, 15%, or even higher frequently occur. Not all traders are willing to enter after the price has already surged significantly.
Additionally, there remains the possibility that the price will fall back below the breakout level on the next trading day. Therefore, the possibility of breakout failure still exists, just not on the day of the breakout.
Entry and stop loss.
Once the price closes above the determined resistance level, buy. Closing price depends on the chosen time frame. In this case, the stop loss can be directly set below the breakout candlestick (aggressive), or slightly lower to give the price more room to fluctuate, avoiding an early stop loss (conservative).
Option 4: Buy after the breakout backtest.
The last method is the most conservative. First, like option 3, wait for a confirmed breakout. Then, wait for the price to retrace to the breakout level before entering.
Successful backtesting serves as an additional confirmation signal after a breakout. This trading method requires traders to have immense patience and the ability to resist the temptation to enter early. Those who use this method need to accept that if the price immediately continues to rise after the breakout without a retracement, many breakout opportunities will be missed.
Some traders use the backtesting method to expand their initial (light position testing) position to a full position. In this case, the method of backtesting is very important. A decline that causes the price to return to the initial breakout level should be controlled, and the selling volume should be lower than the previous buying volume.
Entry and stop loss.
Buy after the price retraces to the initial breakout level. Buy when the price retraces to the initial breakout level and shows a reversal signal. The stop loss is usually set just below the breakout level. However, you can also choose a more conservative approach by using the previous swing low as the stop loss.
How to exit a successful breakout trade?
After a successful breakout, properly managing the long positions opened is crucial for achieving structural profits in the long term. Depending on your trading style, there are several methods to achieve this.
1. Set price targets.
Set price targets along with entry and stop loss. Ensure your target is at least 1.5 times the initial stop loss.
2. Use trailing stop loss.
This stop loss method ensures partial accumulated profits are protected when prices drop. However, as long as prices rise, the trailing stop loss will also rise, thereby protecting a larger proportion of profits.
3. Use technical indicators.
Help you determine whether the momentum of the existing trend is strengthening or weakening. Below, we will discuss several technical indicators that can provide insights into price movements.
@RSI indicator.
This is a momentum oscillation indicator used to measure the speed and change of price movements. The default upper limit of this indicator is 70. Values above this are considered overbought.
Traders should pay attention to possible trend changes (short-term or long-term). In particular, divergences between the RSI indicator and price should be closely monitored to detect price changes in the early stages.
@MACD indicator+
This is a trend-following momentum indicator, composed of the MACD line and the signal line. The MACD line crossing below the signal line can serve as an exit signal for existing long positions.
@Bollinger Bands+
Bollinger Bands are used to monitor price volatility or the degree of fluctuation. It defines the upper and lower limits of price fluctuations based on the standard deviation of the moving average. If the price exceeds the upper limit (upper Bollinger Band), it may indicate overreaction and could trigger a price drop. Based on this, you can close existing long positions.
Be cautious when using technical indicators as exit signals. In strong trend movements, they can generate many false signals, leading to further price increases and causing you to miss out on substantial profits in the long run.
It's best to use indicators as warning signals. Instead of closing positions immediately, it's better to manually move the stop loss slightly closer to the current price.
If the exit signal is correct, you will ultimately be stopped out (while retaining most of the profit). However, if the price continues to rise, you will keep profiting from the upward trend.
How to exit a failed breakout trade?
Just like managing profitable positions, properly managing losing positions is also crucial. The only quick and effective way is to use hard stop losses.
When using a breakout strategy, traders expect the trend to continue after the breakout. If the breakout fails to continue and the price drops again, a stop loss will ensure that losses are limited.
Previously, we mentioned the approximate position of the initial stop loss in each option. In this regard, we want to emphasize two points.
1. Closely monitor important support levels and strategically set stop loss below these support levels. If the previous support level fails to bring the price back up, it is a strong signal that the price may decline further. A stop loss will protect you from larger price drops.
2. Do not set stop losses too close to the current price. In such cases, the stop loss may trigger too early. In many cases, you will notice that shortly after, the price will move in the expected direction. This can lead to a lot of frustration!
To determine the minimum distance for stop loss, you can use indicators like ATR.
The ultimate guide to capital management in contract trading, from liquidation to stable profits' underlying logic.
The essence of capital management.
The truth of the crypto market: 90% of losses stem from uncontrolled capital management rather than technical analysis errors.
Definition: Capital management is not just about setting stop losses; it's a precise risk control system.
Core issue:
1. Balance position and leverage: Avoid single losses clearing the account.
2. Quantify risk and return: Ensure a long-term positive expected value.
3. Human nature vs. discipline: Use rules to restrain greed and fear.
Two, why capital management is the first iron rule for survival in virtual currency.
The 'death accelerator' characteristic of the crypto market.
High leverage and high volatility amplify consequences.
Cryptocurrency A: 10x leverage, 10% fluctuation → account +100%, intraday liquidation.
Currency B: 50x leverage, 10% fluctuation → account +500%, instantly zeroed.
Case: In 2023, a trader with 1 BTC principal fully operated on an altcoin and encountered a 'flash crash,' resulting in a single-day loss exceeding 400% of the principal (owes the platform 3 BTC, facing liquidation risk).
The three survival values of capital management.
Risk control: Single loss should be limited to 1-3% (professional standard).
Compound interest effect: 20% annual return grows to 6.2 times in 10 years.
Psychological protection: Avoid the vicious cycle of 'losses lead to revenge trades and further losses.'
Three, seven capital management strategies and applicable scenarios.
Fixed ratio method (a must-learn for beginners).
Rules: Each risk = account net value x 1-2%.
Formula: Opening amount = (Account net value x risk ratio) / (Stop loss percentage x coin price).
Case: 1 BTC account, 2% risk, ETH stop loss 5% - open 0.4 ETH.
Applicable: Volatile markets, multi-currency combinations.
Kelly formula (core of quantitative trading).
Formula: f=(bp-q)/b (f: position ratio, b: profit-loss ratio, p: win rate, q=1-p) Case: Strategy win rate 45%, profit-loss ratio 2:1 → f=0.15 (15% position).
Advanced: Half Kelly formula to prevent liquidation, reduce f value during consecutive losses.
Applicable: High win-rate strategies, automated trading.
Volatility adjustment method (institutional standard).
Process: Calculate the 7-day ATR (Average True Range) of the cryptocurrency and adjust the position to 1-2 times the ATR.
Case: Current BTC ATR = $500, can withstand a $1000 fluctuation, maximum position = account net value/(ATRx2).
Applicable: Trend markets, high volatility altcoins.
Phased increase in position method (trend trading tool).
Rules: Pyramid increasing positions (increase 50% when price rises 5%, increase 30% when rises 10%, stop at 15%).
Trap: Inverse pyramid increasing positions (the higher the price, the more all-in).
Applicable: BTC/ETH unilateral trend market.
Combination hedging method (professional advancement).
Methods: Cross-currency hedging (BTC/ETH), stablecoin hedging (USDT/BUSD), options protection (buying put options).
Formula: Hedged position = base position x volatility coefficient.
Applicable: Black swan events (such as regulatory news), periods of market turbulence.
Risk parity model (core of asset management).
Steps: Calculate the risk contribution of each variety, adjust positions to balance risks.
Case: Portfolio includes BTC, ETH, XRP, controlling maximum drawdown within 10% in 2023. Applicable: Multi-currency, multi-strategy investments.
Applicable: Multi-currency, multi-strategy investments.
Emotional circuit breaker mechanism (retail investor's lifeline).
Rules:
Daily loss ≥ 5% - Suspend trading for 24 hours.
After three consecutive days of losses, reduce the position by half.
Single month drawdown ≥ 15% → Strategy review.
Applicable: All retail investors (especially FOMO/FUD drivers).
Four, capital management practical roadmap.
Choose strategies based on capital scale:
<7000U: Fixed ratio + emotional circuit breaker, target 15%-25%, drawdown <8%.
9000-10000U: Volatility adjustment + phased increase in positions, target 20%-40%, drawdown <15%.
>100000U: Risk parity + combination hedging, target 15%-30%, drawdown <10%.
Five, the seven deadly sins of capital management (bloody lessons).
Full position operation: The crypto market is not a casino; 99% of liquidations stem from this.
Adding to losses: 'Bottom fishing again' is the biggest lie.
Ignoring volatility: Playing mountain coins with BTC positions leads to death.
Confusing timeframes: Short-term strategies holding overnight.
Over-optimization: Backtesting leads to wealth, real trading leads to zero.
Leverage out of control: 50x leverage with no buffer turns into 'air.'
Emotional decision-making: FOMO chasing highs, FUD cutting losses is the eternal price.
In fact, contracts are not meant for ordinary players.
1. Capital management must be solid. With leverage of 0-100x, short-term losses are inevitable, and the single trade risk should generally not exceed 2%-3%, with aggressive players at 5%-8%. Exceeding 8%-10% risk can lead to a 70% drawdown in adverse situations. Most people’s breaking point for mindset is around 50%. Strictly enforce capital management.
Many people prefer 5x or 10x leverage, with levels above 4h. For levels above 4h, stop losses are generally set at 5%-15%, and the single trade risk reaches 25%. Doing this is tantamount to seeking death. To ensure risk levels while also using high leverage, the level must be lowered to 1 hour, 15 minutes, or 5 minutes.
As for smaller timeframes, the number of traders who can handle them decreases. The 1h-4h timeframe is generally the limit for average players, while the 5-15 minute timeframe can be managed by professional traders, and even 1-minute levels are beyond the reach of typical professionals.
2. The trading system must be solid. Refining the trading system requires long-term experience accumulation. The hallmark of successful refinement is not operating outside the model, with clearly defined conditions. In this process, continuous iteration is necessary, experiencing the tribulations of bull and bear markets. Due to leveraged trading, T+0, and frequent trading, be prepared for 90% tuition fees. Many people come in with hundreds of thousands; they need to understand one thing: no matter how much initial capital it is, it is only enough to pay for tuition once; there are still eight times afterward. Therefore, it is necessary to start with small amounts, a few hundred or a few thousand can work. Also, do not increase capital when profitable; withdraw profits and continue trading with small amounts. At the beginning, the system and operations will not be particularly refined, and many mistakes and unnecessary actions cannot be avoided. Many posts mention how much they lost; in my opinion, such losses are meaningless; they are just tuition fees, and they haven't even touched the door yet. The learning curve has not risen, and it is no different from gambling.
3. Execution must be solid. Similar to last year's May 19 incident, one wrong direction bet can lead to irreversible consequences. No matter how much you earned before, if you fail to navigate through such black swan events, it all equals zero. Strict stop losses are essential; more liquidations happen from counter-trend bottom fishing, similar to the recent Luna+ being liquidated from counter-trend bottom fishing. Do not gamble on low-probability events, nor should you fantasize about achieving everything in one go.
4. Time and experience accumulation. A bull market can shake the market; you need to be familiar with the characteristics of different stages of the market and adjust strategies based on market conditions.
For small retail investors, the time spent in this market is limited. Entering such a professional market is indeed very difficult, and I suggest a few points.
1. Small funds for trial and error.
2. Keep leverage below 2/3 times. Based on the larger cycle, manage your funds accordingly and consider rolling positions.
3. Operate on 1h, 4h, or daily chart levels.
4. Insufficient conditions; do not trade contracts short-term unless absolutely necessary.
5. Without completing the previous four items, do not invest more than 20,000; only use funds that you won't mind losing.
In fact, in terms of difficulty, contracts are much harsher than arbitrage and spot trading. Don't be fooled by the few people at the top of the pyramid; they are just luring retail investors into the market, knowing that the success of one general comes at the cost of thousands of bones.
I hope for fewer tragedies and more rationality. Light positions, follow the trend, and set stop losses. The above advice is aimed at saving your wallet; do not fall into the abyss of gambling. With 2000 bucks in your pocket, why bother with contracts? Making ten times in a year only earns you 20,000. Wouldn't setting up a stall for a month be better? Many people end up in a deadlock, insisting on making it work; the opportunity cost is much higher than other paths. Act according to your conditions.
Giving someone a rose leaves a fragrance in your hand. Thank you for your likes, follows, and shares! Wishing everyone financial freedom by 2025!
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