In the highly volatile cryptocurrency market, contract trading can be likened to 'dancing on the edge of a knife with leverage' — it can quickly double small funds but can also wipe out an account instantly. If you must trade contracts, the following 8 bottom lines must be ingrained in your bones; they are more useful than any 'get-rich-quick technique':
1. If you have two consecutive stop losses, you must stop trading for the day.
The essence of contracts is a 'probability game'; stop-loss is a norm, but the mindset after a stop-loss determines life and death:
Those who rush to 'recover losses' and trade frantically will find 90% of them falling into a 'loss - heavy position - further loss' death spiral;
True experts will immediately stop and review: Was it a false signal? Or was the position too aggressive?
Iron rule: If you have two consecutive stop losses, you must stop trading for the day; never gamble against the market — the crypto world is never short of opportunities; what's lacking is the patience to preserve capital until the next opportunity.
2. Don't believe in 'doubling in three days', slow is fast.
Every day in the crypto world, someone shouts 'huge profits from contracts', but the truth is: 90% of short-term windfalls rely on luck, while long-term survival depends on compound interest.
Just lost and then heavily investing to recover? That's like using leverage to 'gamble with your life'; liquidation is just a matter of time.
It's better to seek stability: earning 3% daily can yield 80% through compound interest monthly, far exceeding the returns of most people's reckless endeavors.
Remember: Contracts are not a race; they are a marathon — occasionally running a red light might yield a win, but long-term it will definitely lead to accidents.
3. Trading against the trend = actively courting disaster.
Once a trend in the crypto world forms (like BTC's one-sided rise or SOL's consecutive plummets), it's like a flood flowing down a mountain; going against the trend by shorting or bottom fishing is equivalent to 'standing in the waves holding wood':
Guessing the top and going short when the market is rising? You might be right 10 times and wrong once, but one liquidation can wipe out everything;
Bottom fishing when the market is continuously falling? It seems like 'picking up bargains', but in reality, you're catching 'falling knives', and the more you catch, the more you get hurt.
Correct posture: Wait until the trend signal is clear (for example, breaking resistance or stabilizing above support) before entering the market; even if you earn 10% less, it's better than being liquidated against the trend.
4. Calculate 'risk-reward ratio' before placing an order; this is a math problem, not a multiple-choice question.
In the crypto world, it is most taboo to 'place orders based on feelings'; before each trade, you must calculate clearly:
If potential profit is 100U, but potential loss reaches 200U (risk-reward ratio of 1:2), give it up no matter how enticing it seems;
At least satisfy the condition of 'earning 2 can accept losing 1' (risk-reward ratio of 2:1) before taking action.
Don't hold onto the luck of 'what if I make money' — in the highly volatile crypto world, the probability of 'what if I lose' is always higher.
5. Newbies die from 'being too active', while veterans win by 'trading less'.
Many people think 'contracts require constant monitoring and multiple trades to make money', but that's a huge misunderstanding:
90% of the fluctuations in the crypto world are 'noise' (such as minor ups and downs within 5 minutes); frequent trading only results in paying transaction fees to exchanges (0.05%-0.1% per transaction, losing 1% of capital on 10 trades);
Real big opportunities may happen only 1-2 times a week (for example, BTC breaking key levels or mainstream coins suddenly getting good news).
Key: Resisting the urge to 'trade' and waiting with a vacant position takes more skill than chaotic trading.
6. Only earn 'money within your understanding'; don't envy others' 'limit-up'.
Some rely on 'MACD golden crosses' for trading, while others arbitrage based on 'Binance announcements'; there's no need to be envious:
Others earn based on their understanding (such as knowing technical indicators or interpreting policies); if your understanding is lacking, blindly following trends will only lead to losses;
Practice 1-2 patterns you are familiar with to perfection (for example, 'going long after breaking the 20-day moving average'), it's stronger than anything else.
The crypto world is never short of opportunities; what's lacking is the determination to 'only earn money that you understand'.
7. Holding positions is a 'quick remedy' for liquidation, especially for newbies.
'Just wait a bit longer and I can break even' — this sentence has killed 90% of new contract traders:
From a 5% loss to a 20% loss, then to a 50% loss, finally being forcibly liquidated by the system (in the leveraged mechanism of the crypto world, a 50% loss can lead to liquidation);
The stop-loss line is not just a formality; it's your 'escape route' for the capital. Cut your losses when the time comes, even if the market rebounds afterward, do not regret — if you're wrong, admit it; it's better than being liquidated.
8. Don't get 'carried away' when in profit; getting carried away will lead to pitfalls.
In the crypto world, 'making money is more dangerous than losing money':
After just a few profitable trades, feeling 'like a master', you start to increase your position size (from 10% to 50%), randomly changing strategies (like canceling stop-loss), or even staying up late to bet on the market.
The result is often 'a big loss back to square one' — the crypto world specializes in treating various forms of 'pride and arrogance'.
Iron law: After making a profit, you must adhere to discipline; position, stop-loss, and strategy must not change.
To put it bluntly: In the crypto world, trading contracts is not about technique, it's about mindset and discipline. Review the above 8 rules before trading each day, and it can help you avoid 80% of liquidation pitfalls.
Follow me, and I will guide you through the dangers of crypto contracts, helping you preserve your capital and steadily earn money based on your understanding.
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