First point, what is a contract?

Contract trading refers to an agreement between buyers and sellers to exchange a specified quantity of an asset at a designated price at a future time. In simple terms, it means you think a certain cryptocurrency will rise or fall by a certain future time, and you choose to buy long or sell short contracts to profit from price movements. Many newcomers don’t even understand what a contract is and start making risky moves. If you win, it’s just luck; if you lose, it’s just your fate.

Second point, clearly understand your risk tolerance.

Many newcomers enter the market wanting to make big profits, unable to accept the low returns of spot trading over time. They want to make a sudden, rapid profit by choosing to play contracts with leverage. Here, I want to remind everyone that I personally believe beginners should not rush to play contracts since the volatility in the cryptocurrency market is very high, and a careless move can lead to losses. Most people who start trading cryptocurrencies have low psychological tolerance, and once they incur losses, they can fall into extreme self-blame and negative emotions. If you have already set your risk tolerance and are willing to try with part of your assets, please read on.

Third point, controlling the overall market.

Many newcomers to contract trading easily fall into the misconception that it's simply about buying low or high, but they overlook a serious detail: controlling the overall market trends. We can also call this judgment. For example, in a poor overall market, insistently buying up can easily lead to losses. Before engaging in contracts, make sure to have your own assessment of the market. We can base our trading decisions on the cryptocurrency market's operational state, recent reports on the coins we want to trade, and predictions of their future price ranges. Specifically, I recommend downloading market analysis apps such as Feixiaohao, Aicoin, and CoinMarketCap for reference.

Fourth point, the leverage ratio of contracts.

The most exciting part of playing contracts is determining whether a cryptocurrency will rise or fall in the future. You can choose an appropriate leverage ratio to enhance your return. For example, leverage risk: this is easy to understand. If you open a trade with 10x leverage and the price drops by 2%, your loss is magnified by 10 times, resulting in a 20% loss. Moreover, these trades do not have the small fluctuations like stocks; a 1% or 2% rise or fall is very random. It is possible that the big player in the market decides to sell off, and the price plummets. Therefore, newcomers must have a corresponding understanding of the risks of leverage. However, beginners should not rush to play with high leverage; the higher the leverage, the greater the risk. A slight fluctuation could lead to liquidation. It is recommended that beginners keep their leverage below 10x when trading contracts.

Fifth point, mistakes in judgment decisions.

Those who walk by the river often get their shoes wet. Most cryptocurrency traders have a bullish mindset. Sometimes when we make a wrong judgment and the market starts to decline, what should we do? Here we need to understand the significance of stop-loss. Many might ask, stop-loss means losing money; originally, we only had an unrealized loss, but if we actually stop-loss, we incur a real loss. However, this understanding is shallow. Some online examples explain it well: stop-loss is like a seatbelt in a car; most of the time it seems useless. Often, when you stop-loss, there might be a significant rebound instead. Some people, during a volatile period, stop-loss and then reverse their position, leading to further stop-loss. In fact, the purpose of stop-loss is to prevent you from losing too much money.

Sixth point, reasons for losses during operations

(1) Never back down; vow to hold on.

Most newcomers choose to hold on! Don't give up! Maybe it will bounce back soon. Often, this holding mindset is a gambling mentality. If you're lucky and hold on, you might get through, and naturally, you feel your holding strategy is correct. But suddenly, you could face a liquidation. For example, recently, the unfavorable comments from eos's BM led to a slight correction, and many thought it was fine to hold on. As a result, the situation escalated uncontrollably, and many faced liquidation. This is the devastating impact of black swan events on holding trades.

(2) Cannot resist temptation and keeps adding to positions.

Sometimes after opening a position, you find your judgment was correct, and the price rises by a few or even several percent. Then, unable to resist temptation, you rush to add to the position, investing hundreds or thousands. If you're lucky, and the price keeps going up, the additional position indeed earns you a good amount, but this risk is enormous. Sometimes, continually adding to your position can backfire, leading to greater losses or even liquidation during a rebound. Here, I suggest that beginners only add to positions when you already have profitable contracts. Add in batches. Never add margin to losing contracts; learn to stop-loss. It’s better to cut losses and re-enter than to add to a losing position.

Seventh point, how to reduce your risks.

(1) Establish risk tolerance points

For example, if your trading capital is 10,000, and you can tolerate a loss of 5,000 in contracts, then you can use that 5,000 as your contract fund. If you exceed that loss, stop trading contracts.

(2) Spend more time in spot trading to develop market feel; spot trading won't let you lose everything at once.

Find your feel in spot trading; know when to buy and when to sell best. Develop your psychological tolerance in cryptocurrency trading. After all, many people feel immense pain even with slight losses.


(3) Don't think of yourself as a trading master just because you're making profits; have a deeper understanding of the market.
You must know that even the most capable people have experienced liquidation; who among the big players on Weibo hasn’t? Countless people face liquidation every day, and the amounts can be substantial. Desire can make people forget about risks and become greedy, often losing direction and incurring greater losses.


(4) Make a plan.

If you take 5000 to play, you can split it into 10 parts, using 500 each time to operate; that way, you will at least make a profit once or twice in 10 tries. If you can't make a profit in one or two tries, I suggest you start with spot trading; your trading foundation and luck might be lacking. Even if you make a wrong trade judgment, your losses won't be significant if you promptly stop-loss. Of course, I will explain stop-loss strategies later. Position control determines your profitability; making money is just about minimizing your losses and maximizing your profits.

(5) Control your position well.

When the trend is unclear, use a small position to trade; even if you incur losses, it will be a small amount. When an opportunity arises in the trend, use half or full position for trading; this is what we call a one-sided market, and at this time, you can go in heavy because we want to earn big money from this part.

(6) Don't use too high leverage and learn to take breaks.


As mentioned before, the higher the leverage, the higher your risk; with lower margins, even a slight fluctuation could lead to liquidation. At the same time, transaction fees are also substantial. Once liquidation or massive losses occur, you need to take a break before re-entering the market.


Contracts are never gambling; manage your positions well, avoid rushing, greed, and panic, and you can earn steadily!

1. Risk management

  • Position control: Only invest a small portion of your funds in each trade to avoid heavy positions and reduce the impact of a single trade on your overall capital.

  • Stop-loss setting: Set stop-loss points in advance to prevent losses from expanding and protect your capital.

2. Emotional management

  • Don't rush: Avoid impulsive trading and patiently wait for the right entry opportunities.

  • Don't be greedy: Set reasonable profit targets, take profits in time, and avoid missing exit opportunities due to greed.

  • Don't panic: Stay calm in the face of market fluctuations, execute trades according to plan, and avoid emotional trading.

3. Strategies and plans

  • Trading plan: Establish a clear trading plan, including entry, exit, and risk management strategies, and execute it strictly.

  • Diversification strategy: Combine different strategies such as trend following and arbitrage to spread risk.

4. Continuous learning

  • Market analysis: Continuously learn technical analysis and fundamental analysis to improve judgment skills.

  • Review and summarize: Regularly review trading records, identify problems, and improve strategies.

5. Tool usage

  • Leverage caution: Use leverage wisely to avoid excessively amplifying risks.

  • Automated tools: Use tools like take-profit and stop-loss orders to reduce emotional interference.

6. Mental adjustment

  • Long-term perspective: Focus on long-term stable profits rather than short-term huge gains.

  • Accept losses: Losses are a part of trading; maintain a calm mindset and avoid letting losses affect your attitude.

Summary

Contract trading requires strict discipline and a good mindset. Through effective risk management, emotional control, and continuous learning, you can improve your trading success rate and achieve stable profits.

Why do most people lose in contract trading?

1. Unable to understand candlesticks and trends.

2. Unable to understand news.

3. Wanting to chase the market as soon as you see it, fearing to miss the opportunity.

4. Wanting to earn more leads to mindless greed.

5. If you lose, sell to recover your capital, or if you make a little profit, just run.

6. The big players are definitely watching my positions.

If you have the above mindset, it is not suitable for you to open a position.

Feeding mode: Provide opening positions, gradually build positions, stop-loss points, easily understandable for new beginners.

* Strictly follow strategies when opening positions; you will earn money sustainably, and losing money is of no benefit to me.

Currently in a bull market, opportunities arise every day with password sharing.