Three thousand yuan = more than four hundred U, it is unrealistic to invest in Bitcoin, Ethereum, etc. and expect to reach 1 million.
But if it is divided into 10U一份，无论你是拿来做合约还是干别的，可以启动40次了——或者也可以一次都不重启，只要做好止损.copies, you can start 40 times whether you use it to do contracts or something else - or you can not restart it once, as long as you do a good job of stopping losses.
. Contracts are not gambling
Actually, it is the same nature as futures and stocks (margin trading), and of course, there are also old guys who think these are gambling...
Of course, it doesn't matter what you say, but those who think it is gambling and still want to enter the market for a gamble basically can't escape losing money and leaving.
When I first started losing money purely, I had this mindset of "contracts = a slightly regulated gamble on big or small", and I directly used 50x leverage on a principal of one or two hundred U.
First order, target 5% profit, maximum loss of 75% in the middle, carried the order, successfully recovered the principal and took profit;
Second order, target 2.5% profit, lost 75% in the middle, carried the order, successfully liquidated and went to zero.
I wanted to profit 2.5% but lost 100%. A few tenths of a percent probability is really unlucky; but now it seems that it is fortunate to have stepped on the big pit of carrying orders so early. If I had a principal of several thousand or even tens of thousands and then got liquidated and left the market...
It is estimated that he will become one of the old guys who always say "contracts are gambling", and as one of the relatively more miserable batch (loss money due to liquidation), will refuse to further understand contracts or even digital currencies.
Then switch to futures or stocks and continue to lose, lose, lose.
2. Find the method and market environment that suits you best
I personally prefer to capture short-term trends, and I was too risk-averse at the time, so I only left $10 USDT in the contract wallet for short-term trading, and transferred everything else to the spot wallet (contract liquidation cannot affect the spot wallet).
In the beginning, the positions were all around $200, which is equivalent to the leverage slowly dropping from 20x to 10x, quick in and quick out. Although 20x, and sometimes even 20+ leverage looks scary, the holding time for each order is 5 minutes or even less than 1 minute, and the loss for each order is controlled below two dollars. Even if the worst situation occurs - that is, liquidation, it is only $10, I can afford to lose a day or two of meal money.
In October and November, I didn't find any market, the only exception was the launch of FIL contracts in mid-October. On that day, the contract price was always about $10 lower than the spot price, from contract 50 spot 60 to contract small 30 spot 40, the percentage difference became larger and larger, and there was also a lot of volatility. I did short-term trades all night, from $50 to more than $600...
Until 6:30 in the morning, an order with even less than 4X position, shorting at $26, but at that time the contract surged instantly, because I was too sleepy and reacted a little slowly...
This order lost $232.89, and is also the largest percentage loss: -36.99%.
3. Position size, volatility, holding time - recognize the true nature of contract and leverage risk
A factor that is as important as leverage and affects risk but is often overlooked: holding time.
Profit and Loss = f(holding time) Volatility Position size
*Risk can be roughly expressed as above. The longer the holding time, the greater the risk. A closer simulation is that risk is proportional to the square root of the holding time, i.e., f(x)=sqrt(x). This paragraph was supplemented on November 28, 2023 at 9:00 am.
Ten times leverage is certainly high risk, but going in to do a 5-minute short trade and coming out, and watching it all the time, is completely incomparable to hanging on ten times leverage and going to sleep directly. Some of the latter are even so excessive that they don't set a stop loss, which is a risk that is almost as big as giving away money. When I had no more than $50 in the beginning, one of the reasons why I often used 10x or 20x leverage was that the holding time was short, so I could trade hundreds of orders but control the risk;
The volatility of altcoins is greater than that of Bitcoin, and the volatility of contracts is greater than that of spot. This also needs to be paid attention to before a novice opens a position. Some friends told me that contracts are risky, but then they went to fully chase the rise of small-cap altcoins whose white papers they had not even looked at in detail. The actual risk they bear is far greater than normally trading contracts. But then again, when misjudging the market direction, a huge fluctuation can also cause me to suffer a large loss. For example, FIL futures rose from 25 to 30 in one or two minutes without any warning, which directly caused me to lose more than one-third of my principal at that time in a single order;
Position size is the most obvious thing. The more positions you have, the greater the risk will be. But I saw someone say, "As long as you keep doing contracts, you will inevitably slide towards 100x leverage" and even say that they use 100x leverage to trade altcoins, which involves another point:
4. Leverage has position limits, you can't open 100x leverage with several thousand dollars
At least for Binance's USDT standard, this is the case. All exchanges have maximum position limits for leverage. Take BTC as an example:
Note the red circle
125X knows what it means, but "maximum position that can be held" 50000 USDT means that you can only really use 125x leverage when you have less than 400 USDT (50000/125). Even if you have 50000 USDT and don't change the leverage, you can only hold a maximum of 1.25 BTC at the moment (it just went back to 40,000 when writing the article). Only opening this one position, it says 125x on it, but you are using one times leverage, which is the same as not using it!
Correspondingly, the maximum amount of BTC 100x leverage can only use $2500, and the maximum amount of ETH 100x leverage is only $100; altcoins do not have 100x leverage, and most of them have a limit of 50x, as shown in the figure below.
Some very large altcoins have higher maximum positions
Also can only use $100 to open 50x leverage.
The maximum position that can be held depends on the leverage, the size of the exchange, and whether the coin is large enough. Binance is already the world's largest digital currency exchange. If the multiple you get exceeds the above too much (for example, letting you use 10,000 dollars to open 100x BTC leverage) or if there is 200x or even higher leverage, it is likely to be a scam by a black exchange!
Since we are talking about leverage, this leads to the following point:
5. 100x leverage with only 10% is not a light position, ten times is ten times!
Unless you have multiple positions, it is no different from entering with 10x leverage and a full position; moreover, multiple positions are only done by people who can at least understand each individual one.
Position/Balance is the actual leverage being used, please use this as a measure of risk.
6. Recognize the limits of your current method
Let's go back to my own trading.
The YFI and CVC market in November allowed my account to grow from $700 to $3000+ (the previous $200+ hole was also filled by FIL myself); then the two days when GRT contracts were launched in December, there was a lot of volatility, and I earned 7000 in total. At this time, the total number of transactions was 4623, and the highest single-day profit was $2769 (the day GRT was launched).
At the end of the year, I mainly focused on XRP, plus some CTK, ZIL, 1INCH, DOGE (yes, I actually did a wave of Doge before Musk shouted out the order at the end of January, although I don't know if it has anything to do with Musk), there wasVolatilityI did it, and the principal slowly reached ten thousand dollars.
The most mentioned word above is "Volatility". My approach is "small positions, large number of orders, and focusing on high volatility", after all, if there is not enough volatility, I would be making dozens of orders a day, which is excessive trading and would result in too much commission loss.
Then, on the evening of January 4th, there was a large fluctuation that I had never experienced before:
Ethereum, which had just broken through 1000, experienced a large fluctuation. In the middle of the night, BTC fell all the way down to $7000 from more than $30,000. At that time, both the fluctuation and the trading volume were unprecedented for me. The peak trading volume of Bitcoin in a few minutes was second only to the 519 crash. In theory, my best single day should be refreshed again.
However, in the end, I lost more than a thousand dollars for the first time in a single day, close to -$1200, and even lost two thousand five hundred dollars at one point. Faced with such a market but setting the worst record, I also summarized the problems I faced at the time:
Lacks competitiveness in the contract market of mainstream cryptocurrencies such as Bitcoin and Ethereum; in addition, as the account grows, the profit space for small positions entering and exiting frequently will become more and more limited, after all, humans cannot compare with quantitative robots, and the advantage of manual trading is not here.
In the days that followed, there was the joy of the first single profit exceeding $1,000 (Ethereum) and returning to $10,000;
There was the disappointment of encountering the YFI market but making a wrong decision and losing nearly $1,000 in several transactions;
And the joy of BTC breaking through 40,000, doing a breakthrough with such a large leverage of 20x for the first time, and breaking the 10,000 balance for the third time...
Although Ethereum also used 20x leverage, I was doing a breakthrough with Bitcoin, which I had little experience with. I got up to go to the bathroom and glanced at my phone, BTC was already 39,500+, and I immediately rushed to the computer and bought it at the market price without having time to analyze it in detail.
I remember very clearly: 5 Bitcoins, the hand placing the order didn't shake, but my heart was about to jump out for dozens of seconds during the holding period. The 20x leverage at this time was not comparable to the 20x leverage with $10 at all. I kept telling myself: analyze the market calmly, pay attention to price action and the latest transactions, and choose a good exit point,What do I care about the amount of profit and loss!
Looking back now, I wonder if it was rational for me, who has always been risk-averse, to place that order without full preparation, after all, I had already lost 800 in the two orders before that one (I made back 300 in the previous order); however, Bitcoin's "first breakthrough of 40,000" marketwill only happen once, it was the right thing for me to take action decisively when it met my entry rules.
That order was the second time my single profit exceeded $1,000. Thanks to this, my next two orders also went well, and later I realized that I couldn't understand the market and went back to catch up on a few hours of sleep.
After trading for a while, Musk shouted out about Dogecoin, and the results on January 28 were good. The overwhelming price fluctuations on January 29 finally gave me the experience of breaking $10,000 in revenue on the first day.
Several months have passed, Dogecoin has gone through many twists and turns. After Musk said that Dogecoin was a "hustle" on the show and the 519 cryptocurrency crash, it has fallen from the highest point of $0.7 cents or more to the current $0.35, almost halved. If I had exchanged all $8,000 for Dogecoin ($0.006) when I first did Dogecoin at the beginning of the year, the income from selling it now would be nearly three million RMB, but I don't regret it because I know:
My trading advantage is not here either. $8,000 is not spare money for me. It is too risky to hold altcoins for several months, and I can't hold them.
7. Stop loss, don't carry orders!
The following is the profit chart up to the 519 crash.
At dawn on February 1st, after the Doge surge, many people agreed that everyone at 9:30 in the evening would
Buy XRP and hold, whoever closes the position first is a dog
Although I didn't go long because of this, I also felt that there would be a market at the time, so I started to tend to go long from 9:30, the leverage was not high, only about one times, but it happened to coincide with XRP's sharp drop at 9:31, from 0.6 all the way down to 0.4. (Who said whoever closes the position first is a dog??)
Set a record for the highest single-day loss (-$6000 or more), and a single loss exceeded $1000 and was direct and continuous twice (up to -$1672.68);
In addition, in the middle of the night on March 18, I thought ADA would rise and made a long, and the position was not large either. As a result, ADA suddenly plummeted, instantly falling from $1.4 to $1.1 at most, setting a record for the highest single loss (-$3549.10).
The reason why I didn't cut losses on these three orders was because I carried the orders because I "felt that I could get them back."
The extra time spent carrying orders without closing the position was only about ten seconds.
In extreme market conditions, a high-leverage position without a stop loss is a luxury even for a few minutes. I have even seen friends who know that there is a risk in speculating on coins but don't set a stop loss and go to sleep directly... Judging from the profitability, it feels stronger than me, but the lack of awareness of cutting losses and stop losses has already determined the ending.
As for unplanned averaging down, or even averaging down with leverage, the nature is even worse. Unless your volume is already large enough to create a reversal alone (such as a niche altcoin) and you have sufficient trading experience, you will only be liquidated faster than carrying orders.
Let me reiterate: profit taking can be situational, but stop loss is a must!
Stop loss is a must!
8. As long as you keep an eye on the market, strategies that have worked will work again
This was told to me by a big brother, if you still see this, tell me and I'll treat you to Korean BBQ hahaha
As mentioned before, the high-frequency, low-position scalping that I started with and am best at will become more and more limited as the account grows. Not only that, even the methods I modified based on the account size have begun to be limited.
Although I have never abandoned it, the opportunities to use it are indeed very few. When there is no lack of market and my profits are unremarkable, I occasionally miss the time when I was progressing the fastest, using short-term trading for the first time to steadily increase my balance and dreaming big dreams with a small account.
May did not go smoothly. The violent fluctuation of the second wave of Dogecoin did not achieve the expected profit. During the two-week downturn, I knew that I should do better but didn't know how to start, and even on the evening of May 19th at 7:30, I didn't achieve any results.
Ethereum has a maximum of $1.8 billion in 1 minute, which is a huge market almost anytime.
Until the real 519 crash arrived, the website became stuck, TradingView's K-line chart was delayed by several minutes, the trading volume count stopped (the actual trading volume exceeded any previous market, including last year's 312), and even the official website's 1-minute candlestick chart showed several almost parallel red candlesticks in error after the rebound.
The trading volume shown below the crash on the right is inaccurate, the actual trading volume is extremely high
I almost subconsciously thought of the market environment that appeared when I first started doing high-frequency trading. It was altcoins last time, but this time it is Ethereum contracts with several orders of magnitude higher trading volume and a scale second only to Bitcoin.
Start from the first reversal, go long with 30 ETH, and close the position immediately after the profit floats;
Second one, 30 ETH, floating profit, close the position;
50 ETH, 60 ETH, the website price is a bit stuck, pause for a while, use 0.003 ETH to test the speed, found that it can be done, then 30 ETH, 50 ETH...
Ethereum's movement was extremely large. Although I wasn't too nervous at the time, I should have been quite focused because I didn't look at the balance next to me at all.
When Binance completely crashed, I stopped and realized that I had exceeded the target.
………………………………
That day of Doge, I worked hard all day and earned $10,000, and I was so happy that I almost couldn't sleep at night, although I haven't had the experience of earning so much in a single day since then;
As a result, on this day, the previous record was broken tenfold at the most unexpected time and in the most unexpected but reasonable trading method - although no transaction used more than 2.5 times leverage, and no revenue exceeded 20%.
Suddenly feels unreal. After being stuck on Binance, I went to chat with friends, friends who have known each other for several years in other aspects and recently started doing contracts, and complained to me that the spot they had was falling very badly. We chatted on and off at the time, and didn't go to bed until his spot had almost recovered to its original price in the early morning. After that, I took a screenshot and transferred most of it to the spot wallet, after all, I don't need that much money with my current level.
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