In the field of contract trading, which is full of risks and opportunities, most participants return empty-handed. To achieve profitability, it is necessary to build a scientific trading system; the following are specific strategies.
I. Select Trading Targets Focus on leading cryptocurrencies in the market, prioritizing mainstream digital currencies ranked in the top two by market capitalization as trading targets. These types of coins have strong liquidity, high market recognition, and relatively regular price trends, which can reduce risks caused by abnormal volatility of the targets.
II. Accurately Seize Entry Opportunities
(1) Short Entry uses K-line charts of 4 hours or longer as a reference, focusing on important resistance moving averages. When the price is continuously suppressed by a key moving average, for example, if the MA60 moving average consistently forms resistance above the price, it can be seen as a signal to gradually position short positions as the price approaches the moving average.
(2) Long Entry is based on K-line charts of the same level or larger levels, looking for strong support levels below. Once the price touches these support areas, consider entering long in batches, taking advantage of the rebound potential of the support price to obtain profits.
III. Scientific Setting of Stop Loss The determination of stop-loss positions must consider the characteristics of price fluctuations. If a spike occurs near the support level, for example, if the support level is at 2220, and the price briefly dips to 2210 before quickly rebounding, the stop-loss can be set below 2210, around 2100, which can prevent further price drop risks while avoiding triggering stop-loss due to normal fluctuations. At the same time, strictly control the stop-loss amount; if the daily stop-loss reaches 20% of the total principal, stop trading for the day; the stop-loss for a single trade should not exceed 10% of the principal, and the position size for each trade should remain consistent to ensure manageable risk.
IV. Optimize Trade Execution
(1) Position Management adheres to the principle of diversifying risk, adopting a phased entry strategy, and avoiding full-position trading at once. Based on market trends, open positions in accordance with the trend; when the market is generally bearish, focus on positioning short positions; when the market shows a clear upward trend, actively seize opportunities to go long. When the overall market is favorable, pay appropriate attention to hot coins to obtain excess returns.
(2) Strict Control of Profit and Loss Ratio strictly controls the profit and loss ratio, setting the target at around 4:1, meaning the expected profit is four times the stop-loss loss, ensuring that the profit space covers potential risks to achieve long-term stable profits. If the daily stop-loss drawdown reaches 15% - 20% of the principal, decisively stop trading to avoid excessive losses.
V. Strengthening Trading Discipline
(1) Daily Review After the day's trading ends, conduct a comprehensive review of the day's trades, analyzing issues in entry timing, stop-loss settings, position control, etc., summarizing lessons learned, and continuously optimizing trading strategies.
(2) Responding to Special Market Conditions When encountering a market crash, maintain a sidelined position and wait for the price to stabilize before entering in batches based on technical analysis. If there are no suitable opportunities, it is better to stay sidelined and wait, avoiding blind operations that lead to losses.
(3) Take Profit and Stop Loss Management If the day's trading has not triggered a stop-loss, and the K-line pattern has not been damaged, a guaranteed stop-loss may not be set for now; conversely, timely follow up on stop-loss to lock in existing profits. Firmly abandon the speculative mentality of 'all-in to get rich', only participate in market trends that align with one's trading system, learn to stay on the sidelines and wait for opportunities, and avoid forced trading.
(4) Time and Position Management Do not hold overnight positions to avoid the risks of overnight market uncertainties; during weekends when market activity is low, if there is no clear trading signal, try to reduce trading. Once a stop-loss is triggered in trading, timely adjust your mindset, eliminate emotional trading, always strictly control positions, avoid heavy or full positions, and ensure steady trading.
The above strategies cover key aspects of contract trading. If you have questions about the practical details of a specific strategy or want to discuss other trading techniques, feel free to reach out to me anytime.
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