Contract trading is a popular method on major exchanges, having already appeared in the stock market and other trading markets. Essentially, contracts amplify your funds through leverage, allowing rapid doubling of returns through buying and selling, making it very popular among cryptocurrency investors. Let's explore what the most stable trading strategies in the cryptocurrency market are.

I. The most stable trading strategies in the cryptocurrency market

Choose the right coins and associate with the right people. As leveraged traders, volatility can be amplified by leverage. The primary consideration during trading should not be volatility but certainty.

In a rising market, go long on strong coins; conversely, in a declining market, short the weakest coins.

For example, at the start of a new quarter, the strongest upward trends are typically seen in EOS and ETH. When retracing, these two cryptocurrencies are the preferred choices for long positions, while Bitcoin is the preferred choice for short positions during a downturn. Even if the final result shows that mainstream coins decline more than Bitcoin, solely shorting or chasing Bitcoin can significantly mitigate the risk of violent rebounds.

Most participants in the cryptocurrency space are short-term traders, and during trading, it is often challenging to hold out for the ideal closing point. They are also not very skilled in position control and cannot rely on volatility to average down, thus, for most traders, a good entry price outweighs everything.

Once there is a profit, take some off the table for safety and set a stop loss at the cost price for the remaining portion. This is something I have always emphasized in my community.

The path of trading is to accumulate wealth gradually; compound interest is king. If you drift away from your cost, you must not turn it back into a loss. If you make a profit, be sure to secure part of it to prevent losing it all. In summary: if you earn, take the bold step forward; if you have to, take the original price loss.

Being able to recognize the trend to make a profit on a trade is a skill, but how much can ultimately be earned from that trade depends on luck. Therefore, I recommend securing the portion of rewards gained from skill first, and leaving the rest to the market's discretion.

With the same principal amount, a stop loss of $200 with 5x leverage and a stop loss of $100 with 10x leverage will result in the same loss when the stop loss is triggered.

A single loss exceeding 30% of total capital is considered serious, and significant efforts will be needed to recover from it. Therefore, when setting stop losses, ensure that a single loss does not exceed 10% of the total position.

II. Tips for making money with perpetual contracts

1. Avoid full margin trading

Avoid gambler behavior; full-margin trading often leads to two extreme situations: either an overnight success or an overnight disaster. This not only fails to provide security for our funds but also does not guarantee continuous profitability.

2. Understand the overall market trend

Those who follow the trend prosper, those who go against it perish. This principle is not only evident in nature but is also vividly reflected in trading! Perpetual contracts inherently offer a funding leverage of 1-125 times, which makes it even more critical to focus on trends during trading, bringing us closer to wealth. Trend analysis highlights this point, and ALPEX services provide adequate support, offering daily trend analyses.

3. Set take profit and stop loss targets

The error rate for short-term trading in perpetual contracts is often higher than that for medium to long-term trading. Additionally, the short time frame for short-term trading reduces the opportunities to correct mistakes. Therefore, when the trend of BTC does not align with expectations, it is crucial to take profit or cut losses promptly to reclaim funds and wait for the next entry opportunity.

4. Avoid excessive frequent trading

Due to the 24/7 trading of BTC perpetual contracts, many investors exhibit overtrading behavior, unable to control the impulse to trade multiple times within a single day, as if they are very skilled, not wanting to miss any market movements, only to end up with empty hands.

III. What types of contracts are there?

Perpetual contracts: Perpetual contracts have no expiration date, allowing users to hold them indefinitely and perform their own closing operations.

Delivery contracts: Delivery contracts have specific delivery dates, including weekly, bi-weekly, quarterly, and next quarter delivery contracts. When the specific delivery date arrives, the system automatically settles regardless of profit or loss.

USDT margin contracts: This means you need to use the stablecoin USDT as collateral, allowing you to trade multiple cryptocurrency contracts as long as you have USDT in your account, with profits and losses settled in USDT.

Coin-margined contracts: These use the underlying cryptocurrency as collateral, requiring the corresponding cryptocurrency to be held before trading, with profits and losses also settled in that cryptocurrency.

IV. What common investment traps and scams exist in the cryptocurrency space? How to avoid them?

1. Ponzi schemes: These schemes typically use high returns as bait, requiring investors to recruit more participants. However, they rely on the funds of new investors to pay returns to older investors. Such schemes eventually collapse, resulting in losses for most participants.

2. Fake ICO projects: ICO (Initial Coin Offering) is a way to raise funds through token issuance, but some scams claim to be ICO projects to attract investments before disappearing.

3. Fake exchanges: Some fake exchanges claim to trade various cryptocurrencies but do not have real markets and liquidity, making it impossible for investors to withdraw or transfer their funds.

4. Ponzi schemes: This model typically requires investors to purchase a certain amount of tokens or join a platform and earn commissions by recruiting more people. However, such models often cannot sustain themselves, leading to losses for most participants.

To avoid these traps and scams, investors can take the following measures:

1. Conduct thorough research and due diligence: Before investing, carefully study the project's details, learn about the team members, and review their backgrounds and experience.

2. Be wary of excessive promises: If a project claims to offer excessively high returns, it may be a scam. Investors should remain rational and skeptical of overly optimistic projects.

3. Find a reputable exchange: When selecting an exchange, ensure that it is a platform with a good reputation and high liquidity. Check user reviews and comments to ensure the platform's security and reliability.

4. Be cautious about Ponzi schemes: Avoid participating in investment plans that resemble Ponzi schemes, as they typically cannot be sustained and may lead to losses.

V. Differences between perpetual contracts and delivery contracts

1. Delivery date restrictions

Perpetual contracts have no delivery date, allowing users to hold positions indefinitely without expiration. Delivery contracts, however, have a specific delivery time, where both parties settle according to the agreed price on the designated delivery date.

2. Leverage multiples

Perpetual contracts typically offer higher leverage multiples, with support for up to 100x leverage, amplifying both risks and returns. Delivery contracts have lower leverage multiples, with a maximum of 20x leverage.

3. Funding fees

Perpetual contracts incur funding fees, with most exchanges charging a daily funding rate of about 0.03%. Delivery contracts, on the other hand, do not have such funding fees.

4. Trading flexibility

Due to the absence of a delivery date restriction in perpetual contracts, it is possible to avoid the repeated opening of positions caused by delivery, thus preventing delays in the market and avoiding the transaction fees associated with repeated position building. In addition, the trading hours for perpetual contracts are unrestricted, allowing for opening and closing positions at any time, while delivery contracts may only allow for closing positions during a certain period before delivery, without the option to open new positions.

5. Price anchoring mechanism

The price of perpetual contracts is anchored to the spot price through a funding fee mechanism, ensuring consistency between the contract and spot prices. In contrast, the price of delivery contracts is primarily influenced by market supply and demand.

I am Ah Yue, focused on analysis and teaching, a mentor and friend on your investment journey! I hope every market investor can sail smoothly. As an analyst, the most basic responsibility is to help everyone make money. I aim to solve confusion, help with stuck positions, and offer operational advice—let results speak for themselves. When you feel lost and unsure of what to do, look to Ah Yue (homepage) for guidance.