5 Essential Indicators for Contract Trading
1. RSI (Relative Strength Index)
Parameters: 14 periods (short-term), 7 periods (ultra short-term) Practical Rules:
RSI > 70: Overbought area, consider opening a short or closing a long RSI < 30: Oversold area, consider opening a long or closing a short Note: In extreme market conditions, RSI may remain muted for a long time (e.g., during the 2021 bull market, RSI remained > 80)
2. Funding Rate
Logic: Positive rate (longs pay shorts) indicates an overheated market, negative rate vice versa Usage:
Rate > 0.1%: Beware of crowded longs; if the price is high, consider opening a short Rate < -0.1%: Shorts are overly pessimistic; if the price is low, consider opening a long
3. Open Interest
Analysis Points:
Price rising + Open Interest increasing: Trend continues Price rising + Open Interest decreasing: Longs taking profits, possible reversal
4. Volatility Index (BVOL)
Usage: Measures market panic level; a sudden spike in BVOL often accompanies a crash Example: During the 2022 LUNA collapse, BVOL surged by 300% in a single day
5. Order Book Depth
Key Observations:
Large sell orders accumulating at a certain price level: Main force suppressing the price Buy order depth far exceeds sell orders: Strong short-term support
Indicator Learning Methods: 3 Stages from Beginner to Expert
Stage 1: Master Basic Indicators (1-2 weeks)
Learning Objective: Understand the calculation principles and basic usage of MA, MACD, and RSI Recommended Tools:
TradingView backtesting feature: Observe the effectiveness of indicators in historical market conditions Binance Academy: Free technical analysis courses
Stage 2: Multi-Indicator Combination Verification (2-4 weeks)
Classic Combinations:
Trend Following: MA50 + MACD + Volume Swing Trading: RSI + Bollinger Bands + Funding Rate
Practical Testing:
Use a simulated account to verify the combination's winning rate, for example: When MA50 crosses above MA200 and MACD histogram turns positive, go long on BTC spot
Stage 3: Integrate On-Chain Data (4 weeks +)
Advanced Strategies:
Whale address movements + RSI oversold → Spot bottom buying Exchange net outflow + Funding rate negative → Low leverage long on contracts
Data Platforms:
Glassnode (Institutional-grade on-chain analysis) CryptoQuant (Exchange fund flow monitoring)
