Many new friends who just entered the cryptocurrency contract space often hear terms like 'margin call,' 'doubling,' '10x leverage,' 'going long,' and 'going short,' leaving them puzzled. Today, I'll explain in the simplest way how to make money with cryptocurrency contracts.
The essence of cryptocurrency contracts is a game of combating market volatility with cognition and discipline.
One, The First Coin: The Underlying Logic of Directional Betting
The essence of contract trading is like flipping a coin: you judge whether the coin lands on 'heads' (going long) or 'tails' (going short). Unlike casino coins:
Leverage turns a coin into a dice: 10x leverage is like turning a coin into a 10-sided die, amplifying profits by 10 times if guessed correctly and equally amplifying losses if guessed wrong. For example, using 1,000 U to long Bitcoin at 10x leverage, if the price rises from 30,000 to 31,000 (a 3.3% increase), the profit directly becomes 330 U (33%), but a 3.3% drop would lead to a margin call.
Profit from both long and short positions: In traditional stock markets, you can only make money when the coin is 'heads up,' while contracts allow you to profit when the coin is 'tails up' (when prices fall). For instance, if Bitcoin drops from 30,000 to 29,000, short sellers can also earn 330 U.
Two, The Second Coin: Advanced Play of Strategy Combinations
In addition to simply betting on direction, you can create an antifragile system through strategy combinations:
Grid Trading: The ATM in a Volatile Market
Automatically buy low and sell high within a predetermined price range (e.g., Bitcoin at 90,000 - 110,000 USD), buying every 5% drop and selling every 8% rise. This strategy could yield an average monthly profit of 2,000-2,500 yuan from a capital of 100,000 yuan during the volatile market in 2025.Funding Rate Arbitrage: Zero-Risk Profit Taking
When the perpetual contract price is higher than the spot price (e.g., Bitcoin at a 1% premium), buy the spot while shorting the contract, earning funding fees paid by the longs every 8 hours. In extreme cases, cross-exchange arbitrage can yield a daily return of up to 72%. For example, TRB has a funding rate of -3% on Binance and -1.66% on Bybit, earning a net profit of 120 USD every 8 hours on a capital of 10,000 USD.Hedging Strategy: Making Money Regardless of Price Movements
Simultaneously open long and short positions to hedge risks and lock in volatile gains. For instance, when Bitcoin breaks 100,000 USD, buy the spot and short the contract, allowing profit through price differences regardless of subsequent price movements.
Three, The Third Coin: The Lifeline of Risk Control
The essence of contract risk is the 'impact force when the coin lands,' which needs to be defended with three layers of protection:
Position Management: Don't Let the Coin Smash Your Capital
Master Tony's '1% Rule': Do not open a single position exceeding 1% of total capital. For example, with a capital of 50,000, control single trade losses to within 500 yuan, allowing retention of 90% of capital even after 10 consecutive stops.
'One-Third Rule': Allocate 1/3 of funds for long-term investments, 1/3 for swing trades, and 1/3 for arbitrage to avoid all-in scenarios leading to margin calls.
Stop-Loss Discipline: Give the Coin a Cushion
Fixed Percentage Stop-Loss: Stop loss if the price fluctuates in the opposite direction by 2% after opening a position to avoid expanding losses.
Wide Stop-Loss with Small Position: Set a wider stop-loss range (e.g., 30 points) but control the position within 1% to reduce the likelihood of being swept by market noise.
Emotional Management: Don't Let the Coin Become a Bomb
'Three Consecutive Losses Rule': After three consecutive stop losses, forcibly keep a flat position for 24 hours to avoid emotionally driven revenge trading.
'Profit Harvesting Mechanism': Withdraw 20% of the principal to fiat wallets every time you make a 50% profit to prevent unrealized gains from turning into bubbles.
Four, Practical Cases: Transforming from a Retail Investor to a Skilled Trader
Case 1: Xiao Li's AI Arbitrage Journey
In 2025, programmer Xiao Li used Binance's smart grid to set up automatic trading in the Bitcoin range of 90,000 - 110,000 USD, buying every 5% drop and selling every 8% rise. Combined with funding rate arbitrage, he achieved an average monthly income of 12,000 USD. His secret is:
Use AI robots to execute strategies, avoiding human intervention.
Strictly adhere to the '4% fiat reserve' principle, keeping 4% of your capital to deal with extreme market conditions.
Case 2: He Mi's Margin Call Warning
With a monthly salary of 3,000 yuan, He Mi borrowed 600,000 yuan to fully invest in gold futures, reaching a position of 6 million yuan under 10x leverage. In April 2025, gold prices plummeted 3.45% in one day, leading to an immediate margin call, resulting in losses equivalent to 6 years of salary. His fatal mistake:
Borrowing to trade cryptocurrency, layering leverage with debt interest.
No stop-loss set, trying to 'hold the position' to break even.
Five 'Don'ts' Every Beginner Must Know
Do not trade with living expenses: Keep at least 12 months of living expenses in fiat wallets to avoid impacting your life due to short-term fluctuations.
Do not blindly follow others: 90% of 'signal teachers' take advantage of beginners' emotional tendencies to buy high and sell low.
Do not blindly trust technical indicators: Tools like KDJ, MACD, etc., should be combined with market sentiment and capital flow for comprehensive judgment; a single indicator has a win rate of less than 40%.
Ultimate Truth: Contracts are a Reflection of Cognition
Every cent you earn in the contract market is a realization of market cognition; every cent you lose is tuition for cognitive defects. The survivors from 300,000 to 34 million essentially transform market volatility into strategy dividends—while others gamble in casinos, they calculate probabilities using mathematical formulas and restrain human nature with discipline.
Final Advice for Beginners:
Practice with a demo account for 3 months, recording the psychological changes in each trade.
Start with 1% position in real trading, prioritize survival before seeking profits.
Pay attention to on-chain data such as 'funding rates,' 'open interest,' and 'long-short ratios' as they are more real than K-line charts.
Remember: Contracts are not a gambling table but a digital printing machine built with strategies and discipline. When you can calmly increase your position during a downturn and decisively take profits during a surge, contracts will become an accelerator for your financial freedom.
If you feel helpless and confused about trading and want to learn more about cryptocurrency knowledge and cutting-edge information, click on my profile to follow me, and stop getting lost! Understanding the market clearly gives you confidence in your operations. Consistently making profits is far more practical than fantasizing about getting rich quickly.
