First point, what is a contract?

Contract trading refers to the agreement between buyers and sellers to receive a certain quantity of a specific asset at a specified price at a future time. In simple terms, it means you think a certain coin will rise or fall by a specific time in the future, choosing to buy long or sell short contracts to gain profits from price increases or decreases. Many newcomers do not even understand what a contract is and start making risky moves. If they win, they think it's good luck; if they lose, it's just their fate.

Second point, recognize your risk tolerance.

Many beginners enter the market wanting to make big money, unable to accept the low returns of spot trading over a long time. They want to make a quick gain by choosing to open contracts and play with leverage. Here, I want to remind you that I personally believe beginners should not rush into contract trading, as the volatility in the crypto market is very high, and you could easily incur losses. Most people who start trading cryptocurrencies do not have a high psychological tolerance; once they incur losses, they may fall into extreme self-blame and negative emotions. If you have set your risk tolerance and are willing to risk a portion of your assets, then please read on.

Third point, control over the overall market.

Many newcomers in contract trading easily fall into the misconception that it's just about buying high or low, but they overlook a very serious detail, which is the control over the overall market trend. This can also be referred to as judgment. For example, if the overall market is poor and you insist on buying long, this kind of judgment can easily lead to losses. Before engaging in contract trading, please first form your own judgment about the overall market. We can base this on the operational status of the cryptocurrency market, recent reports on the specific coin you intend to trade, and predictions about its future trading range. Specifically, I recommend downloading market analysis software like Feixiaohao, Aicoin, and BiCoin for reference.

Fourth point, the leverage ratio of contracts.

The most exciting part of contract trading is determining whether you think a coin will rise or fall in the future, allowing you to choose an appropriate leverage ratio to enhance your returns. For example, leverage risk: this is easy to understand. If you open a position 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 fluctuate as little as stocks; 1% or 2% price changes can be quite random. It’s possible that a major player on the platform decides to sell off their assets, causing a sharp price drop, so beginners must have a corresponding understanding of this leverage risk. However, newcomers should remember not to rush into high leverage; the higher the leverage, the greater the risk. A slight fluctuation could lead to liquidation of your position. It is recommended that beginners keep their leverage below 10x.

Fifth point, decision-making errors.

Those who frequently walk by the river will inevitably get their shoes wet. Most cryptocurrency traders have a bullish mindset. Sometimes, when we make a wrong judgment and the price starts to decline, what should we do? Here we need to understand the significance of stop-loss. Many newcomers may ask, 'Isn't stop-loss just about losing money? Initially, we only have unrealized losses, but if we actually stop-loss, then we incur real losses.' However, this understanding is too superficial. Someone online gave a good analogy: a stop-loss is like a seatbelt in a car—most of the time, it seems useless, and often when you stop-loss, the price may rise significantly afterward. Some people even find themselves losing more after stopping out and then re-entering during a fluctuation. In fact, stop-loss is intended to prevent you from losing too much money.

Sixth point, reasons for losses during operations.

(1) Never give in, vow to hold your position.

Most newcomers will choose to hold on! 'Don't back down! It might come back soon.' This holding mentality often mirrors a gambling mindset. If you're lucky, you may hold through and come out fine, leading you to believe you won’t be wrong, but suddenly, one time, you could get liquidated. For instance, recent comments from EOS's BM were bearish; originally, it was just a slight correction, but many thought it was okay to hold on. As the comments uncontrollably escalated, the market makers took advantage of the situation to sell off heavily, leading to many liquidations. This is a devastating blow to those who hold on during a black swan event.

(2) Unable to resist temptation, continuously adding positions.

Sometimes after opening a position, you find your judgment correct and the price rises by a few or even ten percent. Unable to resist the temptation, you rush to add to your position, whether it's hundreds or thousands. If you're lucky and the price continues to rise, the added position may indeed earn you a good amount of money, but this carries significant risk. Sometimes, continuously adding to your position can worsen your situation, leading to greater losses or liquidation during a rebound. Here, I suggest that beginners, when their contracts are already profitable, add to their positions gradually. Do not add margin to losing contracts; learn to stop-loss. It’s better to cut your losses and re-enter than to add to a losing position.

Seventh point, how to reduce your risk.

(1) Set a risk tolerance point.

For example, if you have a capital of 10,000 and can tolerate a loss of 5,000 on contracts, then you can use this 5,000 as your contract fund. If your losses exceed this amount, stop trading contracts.

(2) Look for your trading sense in spot trading; after all, spot trading won't wipe you out in one go.

Find your feel in spot trading—when is the best time to buy, when to sell. This will help you build your psychological tolerance for trading cryptocurrencies. After all, many people feel immense pain even when they lose a little.


(3) Don't think you're a trading genius; you need to have a deeper understanding of the market.
Even the most skilled traders have experienced liquidations. Which big names on Weibo have not? Countless people are liquidated every day, and the amounts can be quite large. Desire can make people forget risks, leading to greed. When people lose their direction, they often incur greater losses.


(4) Create a plan.

If you take 5,000 to play, you can split it into 10 parts, using 500 each time to trade. This way, you're likely to make a profit in at least one or two of those trades. If you can't profit in one or two, I suggest you stick to spot trading for now; your trading foundation and luck may not be good. This way, even if your trading judgment is mistaken, with timely stop-loss, your losses won't be too significant. Of course, I will discuss stop-loss strategies later. Position control determines your profits; making money is essentially about minimizing your trading losses and maximizing your profits.

(5) Control your position well.

In unclear trends, use small positions; even if you lose, it's just a small amount. When a trend opportunity arises, use half or full positions; this is what we call a one-sided market. At this time, you can go in heavy because we want to profit from this large amount.

(6) Don't use too much leverage in contracts; learn to take breaks.


As mentioned before, the higher the leverage, the higher the risk. With lower margin, even a small fluctuation could lead to liquidation. Additionally, the fees can be substantial. If liquidation or significant losses occur, take a break before re-entering the market.



Contracts are never gambling; manage your positions well. If you are not rushed, greedy, or anxious, you can earn steadily!!

1. Risk Management
Position Control: Only invest a small portion of your capital in each trade to avoid heavy positions that could significantly impact your overall funds.
Stop-Loss Settings: Set stop-loss points in advance to prevent losses from expanding and protect your capital.
2. Emotion Management
Don't rush: Avoid impulsive trading; patiently wait for the right entry point.
Don't be greedy: Set reasonable profit targets; take profits in a timely manner to avoid missing exit opportunities due to greed.
Don't panic: Stay calm in the face of market fluctuations, execute trades according to the plan, and avoid emotional trading.
3. Strategies and Plans
Trading Plan: Create a clear trading plan that includes entry, exit, and risk management strategies, and strictly adhere to it.
Diversified Strategies: Combine different strategies like trend following and arbitrage to spread risk.
4. Continuous Learning
Market Analysis: Continuously learn technical analysis and fundamental analysis to improve your judgment.
Review and Summarize: Regularly review trading records, identify problems, and improve strategies.
5. Tool Usage
Leverage Caution: Use leverage wisely to avoid excessively amplifying risk.
Automated Tools: Utilize tools like take-profit and stop-loss orders to reduce emotional interference.
6. Mindset Adjustment
Long-Term Perspective: Focus on stable long-term profits rather than short-term windfalls.
Accept Losses: Losses are a part of trading; maintain an even mindset to 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 success rate in trading and achieve stable profits.

Why do most people lose money in contracts?

1. Can't understand candlestick patterns and trends.

2. Can't understand news events.

3. See market movements and want to chase immediately, fearing they will miss out.

4. Make a profit and want to earn more, mindlessly greedy.

5. After incurring a loss, sell to recover, or run away after making a little profit.

6. The market makers are definitely watching my trades.

If you have such mindsets, then it's not suitable for you to open a position.

Feeding Mode: Provides entry points, phased position building points, and stop-loss points, understandable even for newcomers.

*Strictly follow the strategy; only then will your profits last. Losing money is of no benefit to me.

Currently in a bull market, opportunities abound; we share passwords every day.#美国加征关税 $BTC