A complete and practical contract trading strategy for cryptocurrencies!
If you have not yet engaged in Bitcoin contract trading,
I strongly recommend you read this article first,
After reading it, you will find that
You have avoided falling into the 'big pit' of the cryptocurrency market.
After reading it, you will find that
You will no longer need to wake up every morning at seven or eight to receive the message 'XXX You have been forcefully liquidated by the system', feeling miserable for several days...
First, look at the table of contents; no chit-chat, no nonsense, just get straight to the valuable content!!
1. Basic Knowledge of Contract Leverage
1. Adding leverage entails 100% risk
2. The level of leverage does not affect the magnitude of risk
3. Just because you made the right judgment doesn’t mean you will win
4. Once you start trading, you will fall into a cycle of self-deception
1. Basic Knowledge of Contract Leverage
Contracts, leverage, and options are collectively referred to as futures, which are a type of financial derivative. They originated from rice traders who, to prevent significant price fluctuations in rice that could hinder normal trading, created a contractual certificate that allows purchasing a future guarantee of a certain price with a small amount of capital. Later, people noticed the price differences between these certificates, which also carried leverage, and began trading them, leading to the gradual emergence of the futures market.
1. Adding leverage entails 100% risk
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.
However, once leverage is applied, the risk becomes 100%, as you have a liquidation point (the risk of losing all your assets) and a 100% chance of hitting that point.
2. The risk of 2x leverage and 200x leverage is the same!
On May 19, 2021, global financial assets plummeted, which directly refreshed the worldview of friends using leverage! Even at 2x leverage, you could still be liquidated.
So, please be aware!!! Leverage does not determine risk; any level of leverage carries 100% risk. What leverage determines is the distance to your liquidation price.
3. Just because you made the right judgment doesn’t mean you will win.
For example, you made the right call and anticipated a rise; after some time, it indeed went up.
But unfortunately, you may have been liquidated early. For instance, if you went long around $6200, it might have dropped to your liquidation price of $5000 before it began to rise, indicating that you were already liquidated, and arguing about it is futile. The subsequent rise is no longer related to you!
4. Once you start trading, you will fall into a period of self-deception.
After placing your order, illusions begin to form; you keep hoping it will move in the direction you predicted, and you'll find yourself staring at it constantly because you are so close to your liquidation price...
In fact, your subjective awareness cannot control the market direction, and you may easily be swayed by price fluctuations, leading to poor decisions.
After reading the above content, you have already surpassed 90% of retail traders in this market!
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