Perpetual contracts, as a new type of contract, evolve from traditional futures contracts. Compared to traditional futures contracts, the characteristic of perpetual contracts is that they do not have a fixed delivery date, and their trading prices are very close to those of the spot market, mainly achieved through a funding rate mechanism. Since perpetual contracts do not have a delivery date, they are suitable for long-term holdings. If you want to know how to make money with perpetual contracts, it is best to understand several mechanisms of the futures market and learn to reasonably mark prices. Now, let me bring you the tutorial on operating perpetual contracts.
How to make money with perpetual contracts?
One, analyze the market conditions
The cryptocurrency market has both unidirectional trends and fluctuating trends. Generally, unidirectional trends only occur over a certain period when the cryptocurrency market experiences either a significant rise or fall. This trend is the easiest to trade; investors only need to buy on dips or short on rallies. In a directionless market, it is not suitable to hold medium to long-term positions; one can only trade short-term, selling high and buying low, and running away with profit.
Two, analyze the trend
The second step is to look at the trend, which can refer to daily candlesticks, weekly candlesticks, or monthly candlesticks, and analyze the long-term factors affecting mainstream coins to determine whether mainstream coins will rise or fall over a period of time. If you enter the market without first looking at the trend and just blindly chase after rising prices or sell at falling prices, you can only leave the market in a poor state. After judging the trend, you can set rough operational goals; it can be said that accurately judging the trend means you are already halfway there.
Three, identify good entry points
Even if you are optimistic about how to make money with perpetual contracts, you should not enter the market recklessly. You should first choose the right entry points; otherwise, it is easy to be stopped out by the market. For example, in the recent cryptocurrency market, it has been on a rising trend, but many long positions have still faced losses. Why? It is mainly because the entry points were not chosen correctly.
Four, choose the right timing
The cryptocurrency market has its own rules; generally, from January to May each year is a bullish season, and one can buy on dips. From May to September, the market is in a fluctuating downward trend, but there is also a certain increase in between, so it is essential to sell high and buy low. In the second half of the year, the market often experiences significant drops or surges, which is also the most profitable period.
Five, control your position
Because only by reasonably controlling your position can you have a chance for stable profits; otherwise, your account will just lead to failure. Generally, invest 10% of your capital in the market. If your account has only $10,000, then each position you enter is $1,000, whether long or short. In a favorable market situation, if your positions are profitable, the stop-loss point should be at the opening price. No matter how confident you are in the market, do not take overly heavy positions. If your entry position is at a loss, never average down against the market unless you have hundreds of billions in capital to support it. Similarly, for a $5,000 account, it is best to make $500 positions.
