1. Three applicable situations for rolling positions.
Rolling positions sound scary, but if you put it another way, adding positions from unrealized profits sounds much better. Adding positions from unrealized profits is just a normal method of futures trading.
You don’t need to maintain a leverage of 5-10 times, just two or three times is enough. The goal is to maintain a total position of two or three times through unrealized profits. Trading Bitcoin is still relatively safe, right? There are only three situations suitable for rolling positions:
Choosing a direction after a long period of sideways consolidation at a new low volatility.
Buying the dip after a significant drop in a bull market.
Breaking through major resistance/support levels on a weekly basis.
You can only have a better chance in these three situations; all other opportunities should be abandoned.
(Tip: Only use money you can afford to lose to play futures.)
Fatty's Viewpoint:
Define rolling positions: In a trending market, after making significant profits using leverage, your overall leverage passively decreases. To achieve compounding effects, increase your trend position at the right time.
The process of increasing positions is called rolling positions.
In the definition of "the right time," Fatty believes there are mainly two types:
1. Increase positions during a breakout in a trending market, and quickly reduce the added positions after the breakout.
2. Increase trend positions during pullback trends in the market, such as buying in batches during moving average pullbacks.
Two, capital management.
Trading is not necessarily full of risks; risks can be mitigated through capital management. For example, I have a futures account of 200K and a spot account ranging from 300K to over 1 million. When there are good opportunities, I invest more; when there aren't, I invest less.
With good luck, you can earn over 10 million RMB in a year, which is already a lot. With bad luck, the worst-case scenario is that the futures account gets liquidated. It doesn’t matter; the profit from spot trading can offset the losses from the futures liquidation. Once you recover, you can dive back in. Can’t you earn a single penny from spot trading in a year? I’m not that bad.
You can choose not to make money, but you cannot afford to lose money. So I haven’t been liquidated for a long time, and I often save a quarter or a fifth of my profits separately. Even if I did get liquidated, the profits would still be retained.
As an ordinary person, my personal advice to you is to use one-tenth of your spot position to play futures. For example, if you have 300K, take 30K to play. If you get liquidated, rely on the profit from spot trading to re-enter. After you get liquidated ten times or eight times, you will surely figure out some tricks. If you still can’t figure it out, then don’t play; this industry isn’t suitable for you.
Three, risks of rolling positions.
Let's talk about rolling positions. Many people think this has risks, but I can tell you that the risks are very low, much lower than the logic of trading futures you are using.
If you only have 50K, how do you start with 50K? First, this 50K should be your profit. If you are still at a loss, then don’t look further.
If you open a position at 10K in Bitcoin with a leverage setting of 10 times, using a single position mode, and only open 10% of the position, that means you are only using 5K as margin, which is equivalent to 1x leverage, with a 2% stop loss. If you hit the stop loss, you only lose 2%, which is 20 bucks. How do those who face liquidation end up losing everything? Even if you got liquidated, wouldn't you only lose 5K? How could you lose everything?
If you are right and Bitcoin rises to 11K, you continue to open 10% of your total funds, similarly setting a 2% stop loss. If you stop loss, you still profit 8%. Where is the risk? Didn’t you say the risk is huge?
And so on...
If Bitcoin rises to 15K, and you successfully add positions, during this 50% market movement, you should be able to earn around 200K. Grabbing twice in such a market means around 1 million.
There’s no such thing as compounding; 100 times is earned through two instances of 10 times, three instances of 5 times, or four instances of 3 times, not through compounding 10% or 20% every day or month. That’s nonsense.
This content not only has operational logic but also contains the core internal principles of trading, position management. As long as you understand position management, you can never lose everything.
This is just an example; the general idea is like this. The specific details still need you to ponder more.
The concept of rolling positions itself is not risky; it is not only without risk but also one of the correct approaches in futures trading. The risk lies in leverage. You can roll with 10 times leverage, or even 1x leverage, and I generally use two or three times. Grabbing twice isn’t the same as getting dozens of times in return? At worst, you can use 0. something times. What does this have to do with rolling positions? This is clearly a matter of your own leverage choice; I have never said you should operate with high leverage.
Moreover, I always emphasize that in the crypto world, only invest one-fifth of your money, and simultaneously only invest one-tenth of your funds in spot trading for futures. At this time, the capital for futures only accounts for 2% of your total funds, and futures only use two or three times leverage, and only trade Bitcoin. You can say that the risk has been reduced to an extremely low level.
Would you feel pain if you lost 20K from 1 million?
Always betting is meaningless. There are always people saying rolling positions are risky, that making money is just good luck. Saying these things is not to convince you; there’s no point in convincing others. I just hope that those who share the same trading philosophy can play together.
The current lack of filtering mechanisms always leads to jarring voices that interfere with the recognition of those who want to see.
Four, trading principles.
There is a very important principle in trading: don't make small profits, don't take big losses.
Simply put in 8 words, it’s actually very difficult to achieve. Let me give you an example:
You opened a position at 20K, and after you opened it, it rose to 21K. You were very happy, took your profit, and made 5%. But then the market kept rising to 25K... You made 5% but missed out on 50%;
Then you tell yourself to make big money this time, absolutely no profit-taking. The market goes back to 20K, you open another position, it rises to 21K again, and you remind yourself to learn from the last lesson and hold on for big profits. But then the market drops back to 20K and falls below to 19.5K, and you cut your losses.
I'm having a hard time!
Many people spend their whole lives caught in this dilemma, constantly shifting and never able to escape.
Is there a way to profit from both big and small market movements?
No, you must choose one. I generally choose not to make small profits.
I can’t do all of this 100%, nor can anyone do it 100%, but I can tell you the correct philosophy. How much you can achieve depends on your personal cultivation. Each of us can only reach a certain proportion of these philosophies, so try to increase that proportion as much as possible.
Five, the mindset for rolling positions.
Whether you are short-term or long-term, a major market movement can earn 200%. As long as you can maintain most of the profit, when the next big opportunity arises, you can earn another 200%. That’s 4 times... As long as you can preserve profit, you can compound it continuously. If you make 200% this time and then lose it back, what’s the use? In the trading market, there’s no such thing as missing out; there are only losses and gains.
Some people may feel they have found the right path and that they are about to get rich immediately.
Touching the right path only means that your probability of making money has increased.
In fact, this operational method requires high demands on mindset, patience, and courage.
1. Are you willing to patiently wait for a good position?
2. Better to miss out than to make a wrong move. When your position shows significant profit, do you dare to give up profit to continue holding?
3. Can you boldly open positions without caring about your principal, even if you lose it all?
The anxiety of missing out, the urgency to take profits after making gains, the worry of losses after opening positions...
It takes a long time to cultivate this. If you want to play, be cautious, and also try to earn profits.
Of course, finding the right path is much better than those who play randomly. Many people spend their entire lives not knowing where the path is.
Six, the core of making big money in the crypto world.
In the crypto world, you should find a way to first earn 1 million. If you only have hundreds of thousands and are just flipping it every day, it’s really meaningless. You might as well work hard. This refers to earning 1 million through trading, not asking you to invest 1 million. Investing 10 million without sufficient knowledge will also lead to total loss.
Only when you have 1 million will your perspective on trading change, because once you have 1 million in capital, even if you do spot trading for a year and double it, you have 1 million profit. If you have a house in a first-tier city, an annual income of 1 million can place you in China's top tier. For an ordinary person, it’s money you can never spend all.
To earn 1 million, you only need to invest 50K, and this 50K can also be done with no risk. You can first invest 100K, wait for an opportunity when the crypto market kills retail investors, then buy spot to earn 100K profit, and then use 50K from that 100K profit to gamble. To make big money, you must gamble. When good opportunities arise, roll positions using two or three times leverage once or twice to roll out.
If you lose 50K in profit gambling, invest another 50K to gamble. If all the profits are gambled away, then stop. Rely on the 100K principal to earn profits to gamble.
It sounds easy to say, but it requires unimaginable patience.
This model allows you to have the potential for getting rich in the crypto world without taking the risk of total loss. Don’t believe in hoarding coins; without sufficient off-market earning ability, hoarding coins is just deceiving retail investors. If someone has 100 Bitcoins hoarded, and you have a few Bitcoins hoarded, isn’t that nonsense? The volatility of Bitcoin has significantly decreased, and you must use leverage to have any chance of getting rich. Two years ago, those who hoarded coins are just now breaking even; those who dollar-cost averaged into the peak of the bull market won’t have much more than a few times return.
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