Five years ago, one early morning, I woke up to the red alarm sound of the exchange. In just three hours, the 6 million assets in my account were completely liquidated, leaving nothing. I stared at the continuously fluctuating negative numbers on the computer screen, feeling like I was nailed to the cross of reality.
Finally, I realized that the crypto space is not a casino, but a battlefield. I borrowed 120,000 from friends everywhere, continually summarizing failures, learning various trading strategies and techniques, and developed a trading method with a win rate of 90%. I managed to roll my funds to 20 million in just 90 days; it wasn't easy!
Guide to selecting leverage for perpetual contracts: Why 100x leverage might be your optimal solution?
1. The underlying logic of perpetual contracts.
Unlimited positions: You can hold indefinitely as long as you do not trigger liquidation.
Price anchoring: Maintain linkage with spot through funding rates.
Leverage flexibility: Adjust leverage flexibly to fit different capital strategies.
2. The core formula for leverage selection: Risk × Efficiency = Return.
1. The essence of risk: Leverage risk depends on position control; 100x leverage can be comparable to low leverage risk through scientific management.
2. Capital efficiency comparison (taking BTC 4700U as an example)
| Leverage multiple | Margin | Utilization rate | Impact of fees |
|----------|--------|--------|------------|
| 1x | 4700U | 100% | Significant |
| 30x | 156.7U | 3.34% | High |
| 100x | 47U | 1% | Low |
Core conclusion: 100x leverage only requires 1% of capital to open positions, allowing 99% of funds to serve as risk reserves, effectively avoiding fee losses.
Three, the practical risk control system for 100x leverage.
1. Position management
Single margin ≤ 5% of total funds.
With 5000U capital, it is recommended to hold ≤ 20 contracts (total margin ≤ 940U).
2. Dynamic risk control.
Fixed stop loss of 2-3%, activate trailing stop at 5% profit.
Daily target of 1-2% profit.
3. Trading discipline.
Prohibit holding positions; use a contract-by-contract model.
Daily trading ≤ 2 hours, avoid emotional trading.
Four, profit estimation (5000U capital).
Table.
Market scenario Daily profit Monthly profit Risk control performance.
Ideal market 2% 3000U controllable.
Normal fluctuation 1% 1000U Stable
Extreme market -5% -500U Risk isolation.
Core conclusion: Under strict risk control, 100x leverage can achieve low risk and high returns.
Five, avoiding pitfalls for beginners.
1. 30x full position risk > 100x 5% position
2. Reserve 5% of capital as maintenance margin to prevent forced liquidation.
Summary: 100x leverage is a professional capital allocation tool; mastering scientific risk control enables efficient and stable trading.
Following the trend of the market is the most reliable beacon to success. In a market downturn, do not attempt to catch the bottom; that is merely a fantasy like a mirage. When the market warms up and pulls back, that is our golden opportunity to buy low, which is much safer than blindly holding the bottom. When selecting digital currencies, we need to cultivate a discerning eye. Those coins that surge like meteors, whether mainstream or non-mainstream, should be approached with caution. Because their rise is too rapid, the pullback can be equally astonishing, and a slight misstep could lead to being trapped.
In the field of technical analysis, I particularly trust the MACD indicator++. When the DIF line and DEA line intertwine below the 0 axis and successfully break through the 0 axis, that is a good buying opportunity. Conversely, if they intersect above the 0 axis and extend downward, that is a signal to reduce positions.
As for averaging down, it is a path filled with thorns and should not be easily ventured. Once losses occur, do not blindly average down, or you will only sink deeper and may ultimately lose everything. Remember to decisively cut losses when in the red and only gradually increase positions when in profit.
Trading volume is also an essential factor that cannot be ignored. When the price breaks out at a low point, if the trading volume significantly increases, it often indicates that a significant opportunity is imminent.
And the most crucial aspect is to follow the trend. By combining daily lines, 30-day lines, 84-day lines, 120-day lines, and other time cycles, when a certain line begins to show an upward turning point, you can clearly perceive the market's direction and make the right decision. The journey of digital currency investment is filled with risks and infinite opportunities. Only by mastering the essence of capital management, the skills of trend analysis, and having a discerning eye for coin selection can you, like me, start from a small point and gradually succeed to become part of the middle class.
So how do retail traders make money?
Many may say that short-term trading relies on technicals while long-term trading relies on logic. In essence, short-term trading is driven by emotions, while long-term trading is driven by value. Value itself also carries emotions, just like Bitcoin can be hyped to 70,000 and then fall back to 15,000; it is not that Bitcoin's value has changed, but rather that the market's sentiment has shifted. Bitcoin is still the same Bitcoin.
Therefore, understanding market sentiment is essential for long-term investment value. As for short-term trading, the so-called candlestick techniques reflect market sentiment. How major funds draw candlesticks completely depends on the overall market sentiment, whether there is capital following trends, and whether there is market heat. It can be said that everything seen and heard on the candlesticks is what capital wants you to see and is not formed by natural trading. The ultimate reflection of sentiment is trading volume.
Therefore, any rise or fall of cryptocurrency is ultimately reflected in trading volume. Only with volume can there be price; without volume, it can only go downhill. The first step for retail traders to counter emotions is to understand trading volume and participate only when there is volume. The principle is straightforward: volume indicates that capital is at work, while lack of volume suggests that capital has abandoned cryptocurrency in the short term.
Why do short-term traders focus on hot spots? Because capital clustering can create the possibility of profit. Even for long-term bullish coins, value investment still accompanies trading volume, and during periods of low volume and consolidation, continuous observation is needed. Retail traders must counter emotions; merely understanding trading volume does not solve the problem; they must have their own trading principles.
The second step for retail traders to counter emotions is to set clear buying and selling conditions. Many retail traders buy and sell impulsively, whenever they want.
The buying point is basically when cryptocurrency has surged, and if you don't buy now, it will take off. The selling point is basically when cryptocurrency has plummeted, and if you don't sell now, you will be deeply trapped. The emotion of chasing highs and selling lows is inherent, stemming from the collapse of retail traders' mindsets and emotions under severe market fluctuations. To counter emotions, retail traders must stop buying and selling impulsively, clarify their buying and selling points, and have a clear principle to determine when to buy and when to sell, deciding before holding positions rather than making impulsive decisions.
The third step to countering emotions is to understand patience and letting go. Among retail traders' mindsets, there is a human weakness, which is regret. You will regret why you didn't sell at the time, leading to a drop in currency prices and resulting in losses. You will regret why you didn't buy when the currency price soared, resulting in missed opportunities. Retail traders need to learn to be patient, enduring floating losses.
As long as the investment logic remains unchanged, floating losses must be accepted; this is one of the situations that will inevitably occur on the investment journey. No one can buy at the lowest point. Retail traders need to learn to let go; letting go means missing out. As long as cryptocurrency does not align with their investment logic, even if prices keep rising, they must not buy in just to follow the trend; they must understand the importance of letting go. Letting go of those price increases that do not belong to their understanding range. Cold-hearted individuals tend to make more money in cryptocurrency trading because lack of emotion is the only way to survive in the market.
Keep learning to improve your understanding. I summarized 5 insights, full of valuable content, hoping to inspire friends who come across this!!!!
1. Do not rush to stop loss during a sharp morning drop; it is usually an overreaction to negative news from the previous night. You can wait for market repair and reversal. During a sharp rise at the end of the day, do not blindly chase the rise; some major players like to test the market and induce buying, and may open low to suppress and collect.
2. Effectively use trading volume, a practical technique, as it can reveal future market trends. Continuous price increases with reduced volume indicate strong control by major players, while a decrease in price with reduced volume suggests that panic selling hasn't occurred and the bottom hasn't been reached, so further declines are likely.
3. Learn to observe the structural peaks of sectors. Usually, sector trends are formed by five waves: the first wave creates following trades, the second wave is a washout and adjustment, the third wave is the main rise, the fourth wave is complex divergence, and the fifth wave is the pullback for unloading. During this process, the third wave has the biggest increase, the first wave is second, and the fifth wave has the least. However, market conditions are ever-changing; it is not uncommon for there to be fewer than five waves. One should not memorize them rigidly. When a leading sector rises, if the supplementary rally does not continue the previous momentum, it is likely to have peaked.
4. Each time the major currency breaks out at the top, you will see a certain sector's altcoins surge, triggering a reversal in the major currency. Just check whether the performances of major leaders have stopped falling and started rising, and the index will likely follow suit.
5. Focus and specialize to better enter the market, especially for new friends just entering the market. Research one trading method and master its techniques; this is more rewarding than trying to learn multiple skills at once. Trying to master too much can lead to failure, and a lack of expertise can easily bring lessons from the market. Do not switch modes casually; focus on learning, and gradually you will improve. After achieving stable profits, you can then learn more techniques to integrate them.
In life, one must experience ups and downs to gain profound understanding! As long as you don't give up, the more you try, the closer you get to success. The greatness of a person is not in doing a certain thing, but in dedicating their life to doing a certain thing.
(If you are still underwater and can't see the market trend, buying leads to declines and selling leads to surges, follow my homepage for daily free sharing of profit codes.)
