Contract trading in the crypto world is a high-risk, high-reward financial derivative operation method, focusing on leverage use, risk control, and strategy execution. Below is a summary and detailed explanation of key operational techniques:
1. Contract types and basic mechanisms
Perpetual contracts
No expiration date, anchoring the spot price through funding rates (settled every 8 hours). For example, when the BTC perpetual contract price is higher than the spot price, longs must pay the rate to shorts (usually 0.01%-0.05%)
Suitable for long-term holding or high-frequency trading, avoiding forced liquidation risk.
Contract for difference
Have a fixed expiration date (such as the end of the quarter), settled at the spot price upon expiration. Prices may fluctuate sharply before expiration (e.g., BTC quarterly contract may fluctuate over 10% within 1 hour before expiration in March 2024)
Suitable for miners to hedge or for short-term speculation, need to guard against 'spike' risks.
2. Position management and leverage selection
Position calculation
Taking BTC/USDT contracts as an example: 1 contract = 0.001 BTC value. If
BTC price 50,000 USDT, 100 contracts worth 5,000
USDT. A margin of 500 USDT is required for 10x leverage
Forced liquidation price formula: opening price × leverage / (1 + leverage × maintenance margin rate). For example, opening a long position in BTC with 50x leverage and a maintenance margin rate of 0.5%, the liquidation price is 48,543 USDT
Leverage suggestions
Newbies are advised to use 3-5x leverage, with a single position not exceeding 10% of total funds. High leverage (like 100x) must be paired with very low positions, otherwise the risk of forced liquidation increases sharply
Position strategy: divide funds into three parts, only use one part for opening positions each time, while the rest is locked in a wallet as a risk buffer
3. Take profit and stop loss strategies
Basic settings
Fixed point method: for example, DOGE current price 0.1 USDT, set take profit
0.12 USDT (20% profit), stop loss 0.095 USDT (5% loss)
Dynamic tracking method: BTC long position rises from 50,000 to 55,000 USDT
then move the stop loss price from 48,500 to 53,000 USDT to protect floating profits
Technical indicators assistance
In the MACD indicator, a golden cross above the zero line is a strong buy signal, while a death cross below the zero line is a strong sell signal
Set stop loss based on support levels, for example, trigger stop loss when BTC falls below the 4-hour chart MA30 moving average (49,500 USDT)
4. Key points for risk control
Avoid common pitfalls
High leverage trap: 1% fluctuation under 100x leverage means liquidation, in 2021
High-leverage players cleared out in 1 hour during the LUNA crash
Frequent trading costs: trading 10 times a day can lead to monthly fees of 15%-30%. Data shows that 92% of users who trade more than 50 times a month incur losses
Capital management rules
Use a separate position model to isolate risk and avoid total liquidation.
After making a profit, first secure some gains, setting a stop loss at the cost price for the remaining position
5. Practical skills and mindset
Trend trading principles
Trade in the direction of the main trend, only establish positions at breakout points and pullback points. For example, in an upward trend, consider going long when BTC pulls back by 10%-20%
Do not trade during sideways phases, wait for clear directional signals
Emotional management
Do not engage in revenge trading after losses, adhere to preset strategies. Keep a trading log to analyze the decision basis for each trade
Practice on a simulated account for 1 month before going live, recommended fund allocation: 10% practice / 30% main battle / 60% backup
I am Ah Yue, focusing on analysis and teaching, a mentor and friend on your investment journey! I wish everyone investing in the market smooth sailing. As an analyst, the most basic thing is to help everyone make money. I will help you solve confusion, trapped positions, and provide operational advice. When you are lost and don’t know what to do, look at Ah Yue (homepage) for guidance.
