Years ago, I personally experienced a painful lesson of account liquidation within just five days, losing over six million. As someone who has been through it, I sincerely advise all newcomers to the coin circle that for those lacking practical experience, it’s wise to be cautious and even temporarily refrain from trading to prevent significant losses. Recognizing the limits of your own abilities and acting within them is crucial.
Since February of this year, with just one account, I achieved a remarkable leap from fifty thousand to over twenty million in just nine months. Today, I am willing to selflessly share my trading strategies and insights with every partner who loves the coin circle.
As the saying goes, standing on the shoulders of giants can help you reach the shores of success faster. I hope my experience can be a valuable support on your journey.
Additionally, at the end of this article, I will reveal a critically important profit system, which is the essence I have derived from years of experience in the coin circle. If you are fortunate to read this and are eager to enhance your prowess in the field of cryptocurrency trading, please be sure to savor it, study it thoroughly, and consider saving it for future reference.
What is leverage? Can’t it just stop killing me?
Leverage, as the name suggests, amplifies your funding leverage. Just like you can lift a large stone with a small lever, leverage allows you to trade larger amounts with less money. For example, as stated in the image, 5x leverage means you can control a Bitcoin trade worth 5 USDT with 1 USDT.
Doesn't that sound appealing? But beware! Leverage can amplify profits as well as losses. If the market moves slightly against you, you could lose more money. Therefore, when choosing leverage, be sure to consider it carefully and avoid selecting too high a multiplier; after all, most people say 'those who play contracts well have two houses at home' is not just talk.
What do full margin and single position mean? Will they affect my returns?
In the Binance trading interface, you will see two options: Full Margin and Single Position (also known as逐仓).
Full Margin Mode: As the name suggests, this mode considers all the money in your account. When there are losses, everyone bears it together. If you have opened several positions and accidentally incur significant losses in one position, the platform will withdraw funds from other areas of your account to support it until all the money is lost. In this mode, the risk is shared.
Full margin is suitable for those who are bold yet meticulous., they believe that using all account funds to withstand temporary fluctuations is manageable. However, if there isn't much money in the account, the risk of liquidation is high.
Single Position Mode (逐仓模式): In contrast, single position mode is like having a small "independent treasury". You can allocate fixed margin for each position, and if you incur losses, it will only affect that portion of money, not dragging the entire account down. This modeis more suitable for conservative players., so even if one position is liquidated, the other positions remain intact.
For example, you have 1000 USDT. In full margin mode, if one position incurs a loss, the platform will automatically use this 1000 USDT to support you; while in single position mode, you can allocate 500 USDT to each position, so if one position loses all, it won’t affect the money in another position.
Take Profit/Stop Loss? How can I set it up to avoid a messy loss?
Take profit and stop loss, as the name suggests, helps you set expectations for profits or losses in advance, allowing the trading platform to automatically close positions when these prices are reached. This is to prevent sudden market reversals from causing you to lose everything before you can react.
Take Profit: When the price reaches the high point you set, the system will automatically help you sell and lock in profits.
Stop Loss: When the price drops to your set bottom line, the system will help you stop loss in a timely manner to avoid further losses.
However, setting take profit and stop loss should not only look at the latest price but also consider the 'marked price.'
What is the difference between marked price and latest price?
Latest Price：This is easy to understand, referring to the current marketrecent transaction price, which changes every second. If you are more concerned about real-time market fluctuations, you can usually use the latest price to set your take profit/stop loss. This way, as long as the latest transaction price reaches your set point, the system will automatically help you close the position.
Marked Price：Marked price is a bit complex; it is asmoother and more stable reference price. Its existence is to prevent drastic price fluctuations in a short time from causing your position to be unnecessarily liquidated.
You can think of the marked price as the platform's 'psychological price', generally more stable than the latest price.If you do not want to be 'mis-killed' by short-term market fluctuations, you can refer to the marked price to set take profit and stop loss..
For example, you set a stop-loss order to sell when Bitcoin drops to 63200 USDT. If you set it based on the latest price, when the latest price touches 63200 USDT, the system will immediately help you sell. However, if the market suddenly experiences a large fluctuation, you might be liquidated before reaching that price. If you set the stop-loss based on the marked price, it can be more stable during large fluctuations, avoiding being washed out by some 'false dips.'
Opening positions, closing positions, going long, going short — feeling confused?
These are all terms used in trading. It’s actually quite simple; we can break it down to understand:
Opening Position: Opening a position means establishing a new position, deciding to buy or sell.
Going Long: You expect the price to rise, so you buy an asset (like Bitcoin), and sell it when it rises; this is going long.
Going Short: You are bearish, believe the price will drop, so you borrow the asset to sell, and buy it back to repay when the price drops; this is going short.
Closing Position: Simply put, it means ending an already opened position. Closing a long position means selling what you bought, and closing a short position means buying back what you borrowed and sold.
What does funding rate/countdown mean?
Funding rates are a unique mechanism of perpetual contracts, where every 8 hours, long and short positions pay each other a fee. If the rate is positive, it means longs pay shorts; if the rate is negative, it means shorts pay longs. This is actually a way for the platform to adjust market supply and demand to prevent one-sided markets.
Countdown refers to the time until the next funding rate settlement. When the countdown ends, if you hold a position, you will either pay a fee or receive a fee, depending on whether you are long or short.
After listening to me ramble on for so long, you may have gained some new understanding of contract trading. Although it appears enticing, the risks are equally significant. Leverage gives you the chance to achieve large gains with small amounts but can also lead to losses that leave you with nothing.
Therefore, cautious trading and effective risk control are the way to go.
Thousand-times contracts may seem risky at first glance, but they are actually the most profitable and have the highest win rate among my investments. Initially, I was quite confused about this, but I gradually understood it was mainly due to me inadvertently following a set of clear trading rules:
Total Margin Setting: The funds I use for contract trading are always fixed, for example, an account's funds are always 300U. This means my maximum loss is 300U, and once the market trend is favorable, I have the opportunity to gain tens of thousands of U. This setting allows me to maintain controllable risk while seizing profit opportunities from significant market movements.
Initial Amount: My initial trading amount is always very low, based on the philosophy of stock trader Livermore. He believed that if you start correctly, it’s best to start making money right away. Therefore, the amount I initially test the waters with is always small, often just single or double-digit U, even if the total margin is 300U, to ensure I am in a profitable position at the early stage of trading.
Adding Position Strategy: I only add to my position when profits appear and the trend is obvious. This strategy allows me to further amplify profits when the market trend is favorable while avoiding increasing risk in an unfavorable market environment.
Stop Loss Setting: I will adjust the stop-loss position in a timely manner based on market conditions to ensure I do not lose principal. This is an important principle I adhere to in trading, helping me remain calm in market fluctuations and avoid emotional trading decisions.
These four rules have invisibly made me strictly adhere to trading discipline. The logic behind them also applies to ordinary low-leverage contracts because the reasoning is the same. Of course, I still want to remind new players before starting:
Contract trading is no child's play, especially for those who believe there is some sort of contract technique or master who can predict prices. Do not blindly believe that just by listening to them, you can make a lot of money; this thought should be avoided. I certainly do not have any secrets that will make you rich just by hearing them. Moreover, contract trading tests human nature significantly; unless you can insist on using very little money, like 100U or 300U, which conforms to the 'small bets with big ambitions' strategy, rather than 'big bets with small ambitions'. I share methods hoping to provide some references for contract players, that’s all.
As for the main skill aspects:
First, transfer USDT into the exchange's contract account, but the total amount should not exceed 300U. This amount is set based on my personal proportion of funds for spot trading. Generally, everyone can also determine the trading amount based on 1% of the total funds, but each trade should not exceed 300U (this limitation only applies to thousand-times contracts).
Additionally, I do not actually recommend trading methods like hundred-times contracts because the risks are too high and the cost-performance ratio is low. Either choose low-leverage contracts below 5X and hold large positions, or choose high-leverage contracts between 500-1000X and trade with extremely small positions. It’s best to only choose the latter method, as contract trading inevitably faces liquidation situations, even low-leverage contracts are no exception. Thousand-times contracts either lead to a liquidation of 300U or to huge profits, generally speaking, with a significant profit-loss ratio.
Therefore, if you master the correct method, you are likely to make money with contracts. However, if you are trading on an exchange without an ADL liquidation mechanism, you are likely to be wiped out. Previously, my group friends and I wiped out A exchange's thousand-times contracts directly offline...
I want to emphasize: the essence of contract trading is to use small amounts to achieve large gains, not to use large amounts to achieve small gains.
Moreover, due to the extremely high multiples of thousand-times contracts, transaction fees and funding fees have become relatively minor. The most important thing is whether you can open the right position. Additionally, the transaction fees for thousand-times contracts are much cheaper than other contracts at the same rate. From another perspective, contract trading is essentially borrowing money to open a position, and this borrowed money only needs to be repaid with interest. If you are liquidated, you don’t need to repay the money, which is actually a very good investment target.
Of course, if you do not trade according to my rules, the speed of your losses will also be very fast.
2. Initial Skills
Assuming BTC is currently at 16500U, after fluctuating for a long time, I still hold a bearish view and expect a major market trend. I would recommend starting with 4U at 500X. Note, this is 2U out of the 300U.
After opening, just don’t care about the rise or fall unless liquidated; just sit back and watch, maintaining calm — it’s as if you chose a direction before opening, and ideally, you should have over 70% confidence in the short term, expecting significant market movements.
Significant market movements generally appear after the K-line flattens, as shown below:
Market trends after 312
As shown in the figure above, after 312, in the subsequent market fluctuations, every time the K-line smoothens, a significant upward or downward trend will eventually appear. Finding opportunities to intervene at this time will be more helpful. As for how to find opportunities, you can refer to some tutorials and observe specific K-line patterns, such as the 2B structure.
Often when opening a position, based on various reasons, you feel the current position is not ideal enough, you can lower the initial position, for example, starting with 1U. Conversely, if you are particularly confident about a certain position, you can slightly increase it.
However, you need to calculate; for 300U, if you use 10U to open 500X, the total position would be 5000U, while your principal is 300U, which is more than 10 times the risk, and is not recommended!
Because the key to our initial positions is to survive the fluctuations, don’t be greedy!
3. Adding Position Techniques
For example, if the market indeed breaks below 16000 and there is huge bearish news, and you observe that there’s a significant opportunity for a major drop based on volume, MACD, etc., then you should consider adding positions, and use profits to add positions. This is commonly referred to as rolling positions, a key strategy for small funds to achieve big gains. However, rolling positions is a technical skill where the majority of liquidations also occur. Let’s discuss the methods below:
At this point, as the market declines, my order has already made a profit, with 300U turning into 400U (for example, I haven’t calculated the exact amount), so I will add a position.
Before adding positions, if I observe that my profit has reached 100U, then I recommend setting a stop loss after adding a position, which means a loss of 100U, leaving a final principal of 300U.
Because at this point, we are already in profit, and the direction is likely correct, there’s no reason to risk the principal further.
At this point, you should note that by setting a stop loss of 100U, it actually means your original position had a principal of 300U, and now it has a profit of 100U. If you increase the position, you might be stopped out at any time.
Because at this time, it can actually be done in steps. The first step is to set a stop loss of 100U; don’t rush to add positions; wait for the profits to expand and then add a bit, little by little, preferably being able to withstand fluctuations.
The secret here is not to be greedy; if you are not sure, it’s better not to add; 500 times contracts can indeed be fierce when it comes to profits, and similarly for losses.
Adding positions also has a special timing issue; it's best to add positions during a small rebound in a downtrend or during a small pullback in an uptrend — the 2B structure is particularly useful here, and worth studying.
It’s best to only add positions two or three times, then watch the market run — the more you add, the riskier it becomes during pullbacks.
In the above chart, this order eventually achieved a profit of 25000U. In the end, A exchange liquidated my order under the pretext of maintenance... otherwise, I would definitely have made it in the bull market. My principal was 46U, and the chart shows the margin of 7U because some funds were deducted for fees.
The reason A exchange liquidated many profitable orders of mine and my friends was that they lacked the ADL liquidation mechanism, which meant the exchange acted as the opponent for players. After I figured out this method, A exchange started losing money easily and had no choice but to act unreasonably. In contrast, Bkex exchange does not have this problem; like Binance, it has introduced the ADL liquidation mechanism, which means users engage in long-short battles without affecting the exchange.
4. Other Supplements
Short-term high leverage is the correct way to trade contracts; high risk but higher returns — I must emphasize again that I am not asking you to play with high leverage, especially if you are a beginner; don’t even touch it because you won’t understand. I am just sharing my thoughts and methods.
1. You need to form your own system.
In the trading system, there is no holy grail.
We can see that short-term experts like Ram Williams and CIS have very good long-term practical results. The former's book has sold a lot, but I haven’t seen a second Williams, because everyone's mentality and system can change slightly, leading to vastly different trading results.
Thus, to wear the crown, one must bear its weight. Forming your own trading system, enjoying its benefits, accepting its shortcomings, and continually summarizing market rules to improve is essential for success.
2. Understand the profit-loss ratio
In the trading system, the profit-loss ratio is the most important aspect. The true profit formula is: Profit - Loss - Transaction Fees > 0.
There are three basic modes in trading, the first two of which are:
Firstly, high profit-loss ratio + low win rate + low frequency. Trend following, medium to long-term. For example, Ouyang Zhuai Bai opened a long position over 3000 and held it until being forcibly liquidated by OKEX for nearly half a year. Fat house bitcoin turned a principal of 100,000 into a small target during the 2021 bull market, and he is also a trend trader.
2. Low Profit-Loss Ratio + High Win Rate + High Frequency. Short-term expert mode, where the profit-loss ratio is often 1:1, very poor, which only some legendary figures might achieve; I feel like I can’t do this. There’s another group of people who seem to be quant trading high-frequency and eating the exchange’s fee spread, which is quite advanced, and they generally do not teach others. Exchanges also crack down on any such activities.
3. Terrifying Profit-Loss Ratio + Medium Win Rate + Extremely Low Frequency. The thousand-times contracts I mentioned are a category I created, which I call the third category, a unique weapon in the coin circle:
For a 300U order, the maximum loss I can accept is 300U. According to my opening method above, I can open many times, but as long as I hit any one of them, my profit-loss ratio will be terrifying. For example, for the 46U order, it went all the way to 25000U; if the website didn’t interfere, it could have reached 50000U, which is nearly 1000 times. Under such profit-loss conditions, along with only opening positions at critical points, a win rate below 10% is still acceptable — do you think a win rate below 10% is easy? It’s impossible to just close your eyes and get only a 10% win rate.
Big data indicates that the win rate for retail investors is around 33%.
From a comprehensive perspective of strategic tactics, both high win rate and low profit-loss ratio systems and low win rate and high profit-loss ratio systems, as well as my system, can all succeed.
Therefore, there’s no need to dogmatically believe that only low win rates with high profit-loss ratios are the way to go; profit-loss ratios must exceed 3:1. Both a 10% win rate and a 90% win rate can potentially create successful trading systems.
Since both high and low win rates can succeed, there’s no need to be entangled in whether to do long or short-term trading; you can even mix both. The important thing is to find a trading method that suits you when the strategic tactics related to trading are well-matched.
