A complete and practical contract trading strategy for Bitcoin!
If you have not yet engaged in Bitcoin contract trading,
then I strongly recommend that you read this article first.
After reading, you will find that
you have avoided falling into the 'big pit' of the crypto world.
After reading, you will realize that
you will no longer need to wake up at seven or eight in the morning to receive the message XXX 'You have been forcibly liquidated by the system' and feel bad for several days...
First, look at the table of contents; no nonsense, no fluff, just get straight to the valuable content!!
1. Basic Knowledge of Contract Leverage
1. There is 100% risk with leverage.
2. The leverage multiplier does not affect the level of risk.
3. Just because you judged correctly doesn't mean you will win.
4. Once you start trading, you will enter a process of self-deception.
1. Basic Knowledge of Contract Leverage
Contracts, leverage, and options are collectively referred to as futures, which are financial derivatives. They originated from rice merchants trading rice, who established a contract certificate to prevent significant price fluctuations from affecting normal trading. By using a small amount of capital, they could buy a certificate that guaranteed a certain price for future trading. Later, people noticed the price differences between these certificates, which inherently carried leverage, leading to the specialized buying and selling of these certificates, and thus the futures market gradually emerged.
1. There is 100% risk with leverage.
Compared to spot trading without leverage, although spot trading also carries the risk of going to zero, if you invest in a long-term appreciating asset and hold it for the long term, the risk approaches zero.
Once leverage is added, the risk becomes 100% because you have a liquidation point (the risk of losing all assets) and a 100% chance of being breached.
2. The risk of 2x leverage is the same as that of 200x leverage!
On May 19, 2021, global financial assets plummeted, directly challenging the worldview of those who used leverage! Even if you are at 2x leverage, you could still be liquidated.
So, please pay attention!!! The leverage multiplier does not determine risk; any level of leverage carries 100% risk. What the leverage multiplier affects is the distance to your liquidation price.
3. Just because you judged correctly doesn't mean you will win.
For example, you bought correctly and were bullish, and after a while, it indeed went up.
But sorry~ you may have already been liquidated early. For instance, if you bought at around $6200, but before it went up, it first dropped to your liquidation price of $5000, indicating that you have already been liquidated. No matter what you say, the subsequent increase has nothing to do with you!
4. Once you start trading, you will enter a period of self-deception.
After placing your order, the illusion begins to set in. You keep hoping it will move in the direction you predicted, and you will be constantly watching it because it is so close to your liquidation price...
In fact, your subjective consciousness not only cannot control the market direction, but you will also easily be controlled by price fluctuations, leading to poor decision-making.
Having read the above content, you have actually surpassed 90% of retail traders in this market!
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