Contracts are a double-edged sword for most people, while for a small number, they are a tool for wealth. If you want to trade contracts, first understand the underlying principles.
1. Assume the probability of liquidation + is 0.1%. After 1,000 trades, the total probability of liquidation reaches 63%. After 2,000 trades, the probability of liquidation is 87%. The probability of liquidation is merely a theoretical assumption. In actual operations, because price movements are generally normally distributed, as the leverage + increases, the probability of liquidation grows exponentially, meaning the probability of liquidation at 10x leverage is much greater than at 5x leverage.
2. Assume each transaction costs 0.1%, with a win rate of 50%. After 1,000 transactions, your capital is likely to be zero.
3. Assume you have 10,000 yuan, if you first make a 50% profit, then lose 50%, you will have 7,500 yuan remaining. If you first lose 50% and then make 50%, you will still have 7,500 yuan. If you lose 90% in a trade, you would need a 900% return to break even.
As for position allocation + and stop-loss line +, there is no essential difference between the two; both reduce risk while also reducing returns.
4. In the spot market, 10% of retail investors can profit; in the contract market, only 3% of retail investors can profit.
Seven taboos of trading contracts manifest as: when you have no positions, you feel restless and must place an order!
1. Position Holding Syndrome ++ This is a common ailment among investors; when holding positions, there is fear of loss, and once the market moves in the opposite direction, they do not know what to do; they believe opportunities are endless and always want to operate, resulting in increasing losses.
2. Frequent 'All Weather' Trading Many investors want to be versatile, going long after closing a short, and vice versa. Although they set high standards for themselves, this contradicts the importance of following the market trend. Do not think in the opposite direction when no force breaks another force; in a bull market, just go long; in a bear market, stick to shorting.
3. Counter-Trend Buying on Rebounds ++ Is it possible to buy on rebounds? If the method is right, then yes. Otherwise, it’s like licking blood from a knife's edge. If a knife falls from the sky, when should you catch it? Without a doubt, you should wait until it falls to the ground and stops moving. Otherwise, you will surely be hurt. Buying on rebounds requires some skills; if you lack experience, do not take risks, just follow the trend.
4. Hesitation when placing orders. Fear of being baited into buying when going long, and fear of being baited into selling when going short, leading to missed opportunities. Understand the principle that after a train starts, there is always a sliding inertia. When the trend takes its first step, we can step in after a step and a half until the balance is broken, and when the trend is confirmed, adopt an 'accept all orders' operational strategy. When signs of false breakouts appear, the chances of winning on the opposite side are significant.
5. Main Force Watching Syndrome ++ Many investors have had this experience: when you go long, the price drops; when you short, it rises; if you cut the long position, it still rises; if you cut the short position, it drops. Trading BTC Bitcoin sometimes requires a bit of luck; the main force does not need your hand. Close the computer immediately, take a break, and come back to trade calmly.
6. Full Position Trading ++ While full position trading can quickly increase your financial window, it is more likely to lead to swift liquidation. Nothing is absolute; even funds cannot fully control unexpected events and the impacts of policies or news. Never go full position; open positions should not exceed 30% of total funds each time; at most 50%, to guard against margin calls or other situations.
7. Never Admit Defeat Many investors are stubborn; they refuse to admit mistakes, failing to resolve wrong positions at the first moment, allowing errors to continue, with foreseeable consequences. 'I just don’t believe it won’t rise; I just don’t believe it won’t fall' is a mindset to avoid at all costs. When acknowledging your mistakes, do not leave room for luck, and decisively set stop-losses at the first moment.
Many people wonder why they get liquidated. Summarizing the reasons, they say it’s due to incorrect judgments. However, it’s not about being right or wrong; you cannot always be right. Most of the time, you are wrong.
The main reason for liquidation is not setting a stop-loss. After a few stop-losses, one might find that they were in vain, and the next time they might skip it, especially after realizing that holding positions seems to recover most of the time, which further strengthens their belief in holding.
But there will always be a time when you can't recover, like this time. If you don't set a stop loss in advance, even if you want to cut losses, you can't. You might withstand it nine times, but it only takes one time to break you.
Must-read before liquidation! Five iron rules of contracts summarized with blood and tears: still losing sleep over liquidation? Today, I'm going to speak some hard truths. If you see green in your account now, or want to transform from a gambler to a professional, these five survival rules are essential!
Iron Rule One: Lock away greed and fear.
Have you seen a trader trembling at 3 AM? Taking profit is not about earning less; it's about guarding against a sudden spike from the market makers at night! A coin that surged 50% yesterday can be cut in half today. Remember two phrases: 'Selling at the peak earns a bit, holding on directly leads to a funeral,' 'Cutting losses hurts for three days, a liquidation hurts for three years.' I've seen brothers hold positions until they were smoking on the roof.
Iron Rule Two: Having no positions is true wisdom.
Can't see through the market like an ex's heart? If you can’t see through it, just tie your hands! On the day of the 2021 519 disaster, a trader without positions was at the club while another, fully invested, was crying in the bathroom. Remember: missing out might just break your legs, but liquidation can cost you your life. The market is never short of opportunities; what’s lacking is capital that lasts until tomorrow.
Iron Rule Three: Use a brick-moving mindset to play contracts.
Want to turn 100 yuan into a Rolls Royce? Wake up! Start with 10x leverage to practice: a 1% rise earns you breakfast money, a 2% drop is just like skipping a pack of cigarettes. By steadily making two or three trades a day, monthly returns can outperform 95% of workers. My apprentice used this method to roll from 5,000 to 200,000 in three months; the core idea is: steady and gradual.
Iron Rule Four: Betting everything is an elevator to the roof.
Heavy positions lead to certain death! Bitcoin flash crashes, LUNA going to zero, which of these did not wash away the all-in party? Remember the position control formula: do not exceed 5% of your capital for a single position, and set the stop-loss line within 3%. Don't ignore this; I’ve seen 2 million in capital fully invested in long positions, and one spike turned it into a rights protection group.
Iron Rule Five: Treat yourself as a machine in operation.
Do you know why 90% of people can see the correct direction yet still lose money? They hesitate to buy when prices drop and are reluctant to sell when prices rise! It took me three years to cultivate the opposite human instinct: when it’s time to cut losses, don’t hesitate; a moment of pain is better than liquidation; when taking profit, don’t look back; the money in your pocket is what counts.
Trading strategies with a win rate of over 80% are something I spent two years, hundreds of days and nights, drawing thousands of charts, and researching to summarize these top trend continuation chart patterns. Once learned, they will serve as your 'ATM.' Many successful trades depend on identifying market structures and chart patterns that indicate whether the existing trend will continue. Trend continuation patterns + are crucial for those traders looking to profit from the existing momentum in the market.
This article will introduce the most effective trend continuation patterns to help traders identify favorable trading opportunities and increase their win rate to over 80%. What are trend continuation patterns? Trend continuation patterns are chart patterns that indicate a temporary pause in the current trend, suggesting that the trend is likely to continue after the pattern is completed. These patterns are important because they help traders seize opportunities to catch the trend resuming after a brief consolidation phase, thus improving entry timing and reducing the risk of buying or selling at the wrong time. Next, we will introduce some of the most important and currently popular continuation patterns.
The key to finding the best continuation patterns lies in the overall trend environment in which the patterns occur. For example, when you discover an ascending triangle +, you definitely want it to form after a preceding bullish phase, indicating that the trend is likely to continue. Most traders overlook this crucial aspect, leading to trading patterns in the wrong environment, resulting in issues. Therefore, ensure to analyze the overall trend when the pattern forms. Top trend continuation pattern analysis 1. Flag + and Triangle Flag + Overview: In the background, finding the best continuation pattern is the most important aspect. On the chart, flags and triangle flags are short-term continuation patterns that typically appear after sharp price movements (referred to as the flagpole). Flags feature parallel support and resistance trend lines, while triangle flags have trend lines that gradually converge, resembling a small symmetric triangle. Visual features.
Triangle Flag: A smaller, gradually converging shape, similar to a wedge or symmetric triangle.
Entry and exit points: @Entry: Traders typically enter trades when the price breaks through the flag or triangle flag in the direction of the previous trend. Exit: A common strategy is to set the profit target at an equal height to the flagpole.
2. Ascending Triangle and Descending Triangle + Overview: Ascending triangles typically form in an uptrend, characterized by a horizontal resistance line and an upward sloping support line. Descending triangles appear in a downtrend, featuring a horizontal support line and a downward sloping resistance line. Breakout Confirmation: A breakout above the upper boundary or below the lower boundary confirms the continuation of the trend. Accompanied by a surge in trading volume, the confirmation effect is stronger.
3. Cup and Handle Pattern + Overview: The cup and handle pattern is a bullish continuation pattern where the price first forms a cup shape, followed by a small downward handle. This pattern indicates that the market has completed its consolidation and is ready to continue rising. The handle part is the most important signal because when the price stops falling and lingers below resistance, it indicates that upward pressure is gradually increasing. Therefore, the low point of the handle should be significantly higher than the low point of the cup.
Duration: @Short-term: May form within a few days or weeks. @Long-term: May take several months, resulting in more significant price behavior. Entry Strategy: @Entry: Set buy order above the resistance level of the handle. Stop Loss: Set below the low point of the handle to minimize risk. ◎Take Profit: Usually set at a level equal to the depth of the cup. 4. Rectangle + (Consolidation Pattern) Overview: A rectangle forms when the price consolidates between parallel support and resistance levels, indicating a pause in the trend.
Trading Trigger Conditions: When the price breaks above the rectangular pattern in the trend direction or falls below this rectangular pattern, it confirms the entry signal. Risk Management Tip: Always wait for confirmation before entering. Common false breakouts occur within rectangular patterns; thus, trading volume can be used as an additional confirmation tool. 5. Inverted Head and Shoulders Pattern Overview: This pattern is usually associated with reversals, but in an uptrend, it can sometimes indicate a trend continuation. This pattern forms when the price creates three fluctuating low points, with the middle low point (head) being the lowest, and the low points on either side (shoulders) being higher yet close to equal.
Continuation Background: In an uptrend, the inverted head and shoulders pattern can serve as a consolidation pattern before the trend resumes. Pattern Formation: The neck line connecting the two shoulder peaks is the breakout level. A successful breakout of this line indicates trend continuation. Entry Strategy: @Enter when the price breaks the neck line and confirms the pattern. @Stop Loss: Set the stop loss below the right shoulder to ensure safety.
6. Inside Day Pattern Overview: In an uptrend, if a small inside day candlestick pattern appears, a breakout the next day may become a strong continuation signal. In a trending market, momentum-inside-momentum candlestick patterns can often be observed.
Stick to these ten principles in cryptocurrency trading; in the end, you will surely reap abundant rewards in the market trading principles.
First, do not easily be fooled by low-priced chips; maintain firm beliefs to prevent manipulation by market makers.
Chasing highs and cutting lows, going all-in and out is always a big taboo. If the overall trend is favorable, accumulating positions gradually during downturns is lower risk, lower cost, and potentially greater profit than chasing highs.
Third, allocate profits reasonably to maximize funds, rather than continually increasing positions. Fourth, take profits during rapid rises and protect coins during sharp declines. Maintain a positive mindset at all times; do not speculate, do not be impatient, do not be greedy, do not fear, and do not fight battles without preparation.
Fifth, relying on experience and the market maker's bet on the future of a low-priced coin is different from the secondary market's game, which relies on technology and information following the market maker. Don't get it backwards; the result will be chaotic.
Sixth, when building positions and liquidating, always do it in layers and stages, gradually widening the price gap to effectively control the risk and profit ratio. Seventh, be familiar with the correlation effects; when trading coins, pay attention to the trends of other coins. Each coin does not exist in isolation in the big market; seemingly unrelated factors are intricately connected. Many tools are now available to check coin information and consultations.
Eighth, allocate reasonably; the configuration of hot coins and value coins should be balanced, paying attention to the ratio of pressure tolerance to profit intake. Being too conservative may lead to missed opportunities, while being too aggressive may face high risks! The most significant characteristic of value coins is stability, while hot coins are particularly volatile, which can lead to rapid gains or total losses.
Ninth, having coins in the market, money in the account, and cash in the pocket is the safest and most reassuring standard configuration. Never go all-in; that will lead to certain death. Your grasp of risk control and reasonable allocation of funds is key to your mindset and success or failure. Idle money investment is fundamental.
Tenth, master basic operations, learn to apply principles broadly, grasp the basic ideas of trading, and observation is essential—remember the highs and lows each time.
As reference data, learn to record, learn to summarize materials, develop a reading habit, and cultivate the ability to select and filter information.
Finally, remember that while we are also speculating and trading coins, we are absolutely not gambling on coins. Amidst the noise of information, distill the essence and stick to your principles to ultimately reap abundant rewards. If you want to know the latest news and analysis, you can follow me.
