How to Achieve Compound Interest through Rolling Contracts in the Cryptocurrency Market

In the field of leveraged trading such as cryptocurrencies, 'rolling contracts' is often seen as an aggressive strategy for small capital to seek high returns. There have been many cases in the cryptocurrency world where wealth has surged through this method: In 2021, the wizard Tony turned an initial capital of 50,000 yuan into a profit of 20 million yuan in one year, thanks to high leverage and rolling contract strategies; during periods of severe market fluctuations, Liang Xi also made a short position with 10,000 yuan, achieving millions in profits through rolling contracts. These cases have made 'rolling contracts' a hot topic, but its essence and risks are far more deserving of in-depth exploration than the stories.

What are Rolling Contracts?

In simple terms, rolling contracts are a trading method of 'betting small for big, compounding gains':

Using a small amount of capital for multiple attempts, leveraging high ratios (such as 100 times) to amplify profits, seizing a trend to double returns.

The core logic is: invest a small proportion of capital in a single trade, withdraw part of the profit after making a profit, and use the remaining capital to continue doubling down, repeatedly operating to expand profits while controlling risks through strict stop-loss measures.

Practical Logic of Rolling Contracts (example with 300 dollars)

1. Small trades for trial and error: each time use 10 dollars with 100 times leverage, a 1% market fluctuation can double the capital (earning 10 dollars) or wipe it out (losing 10 dollars).

2. Firm direction: make an early judgment on the direction of rise or fall; reflect on whether the direction is wrong during consecutive losses and stop in time.

3. Compounding gains: after the first profit, withdraw 10 dollars in profit and continue trading with the remaining 20 dollars; if further profit is made, it becomes 40 dollars, and so on.

4. Lock in profits: set a clear target (such as earning 5,000 dollars or 10,000 dollars), exit immediately upon reaching the target to avoid greed leading to losses.

Core Premises of Rolling Contracts

Accurate judgment: a clear understanding of market trends is needed to seize one-sided markets (such as Bitcoin's monthly fluctuations of around 10%).

Strict self-discipline: control trading frequency, avoid frequent openings; adhere to profit-taking and stop-loss rules, eliminating emotional trading.

Patience in waiting: significant market movements are not frequent and may require months or even years of waiting, avoiding blind operations in a turbulent market.

Why do most people experience liquidation in contract trading?

Inability to restrain oneself: ignoring trends and trading frequently, with fees and slippage constantly depleting capital.

Lack of patience: eager for quick results, forcibly opening positions in unclear market conditions, unable to withstand fluctuations.

Plan stagnation: having a trading plan but not executing it, being greedy when earning and holding onto positions when losing, ultimately leading to liquidation.