Many people think contracts are 'liquidation accelerators', but after many years, I've found that those who can make money long-term are not relying on luck — the core is to adhere to the bottom line of 'risk management'. Even if you don't understand complex trading techniques, just remember these principles to survive and make money in the contract market.
1. First, understand: The essence of making money with contracts is 'lose less, earn more'
Contracts are not about 'betting on size', but rather 'probability games': It's easy to make money once or twice, but the challenge is to achieve long-term stable profits. The key is simple: earn more when you win, lose less when you lose.
Don't pursue 'buying at the lowest point and selling at the highest point', don't fantasize about 'getting rich quick', and don't get caught up in 'how high the win rate is' — even if you only get 5 out of 10 trades right, as long as you earn 10% when you win and lose only 5% when you lose, you'll be profitable in the long run.
Remember: in front of the market, we are all 'little investors'; lower your expectations for yourself, as long as you see profits, keep your mindset stable, and you won't step into 'fatal pitfalls'.
2. The riskiest loss strategy: give yourself 3 chances to recover
Even if you are going to engage in high-risk operations, you must leave an escape route — bear the loss in at least 3 stages; if you haven't been kicked out by the market, there is a chance to win.
For example, if the account has 200,000, the maximum acceptable loss is 40,000 (20%), suggest allocating it this way:
Lost 10,000 for the first time
Lost 10,000 for the second time
Lost 20,000 for the third time
As long as you make 1 correct move out of 3, you can profit or stay in the market. Remember: surviving is a success in itself.
3. The 5 iron rules of contract trading: follow them to minimize losses by 80%
1. Reduce leverage to 2-3 times, 1 time is the safest
Many people think 'the higher the leverage, the faster the profit', but forget that 'the higher the leverage, the faster the liquidation'. With 2-3 times leverage, a fluctuation of 33%-50% will lead to liquidation, leaving enough margin for error; with 10 times leverage, a 10% fluctuation could lead to a total loss, unable to withstand the normal volatility of the crypto market.
If using the full position mode, be sure to set take profit and stop loss — for example, during large fluctuations at 9.25, many people with 2-3x leverage did not set stop loss and lost their entire position, while those who set stop losses lost at most 15% and still had a chance to recover.
2. Must set stop losses! Stop loss is 'cutting losses', not setting stop loss is 'suicide'
Retail investors lose 90% of their money not by stopping losses, but by liquidation. Market volatility is unpredictable; when you make a mistake, you must admit it in time and not hold onto losing positions.
It's advisable to set a loss percentage that you can tolerate (e.g., 15%-30%) and close your position unconditionally when it reaches that point — even if the market rebounds after a stop loss, don't regret it. Just like before 9.25, some people were frequently stopped out when they opened long positions and felt frustrated at the time, but later many people were liquidated, and they were grateful that 'the stop loss saved them'.
Remember: a stop loss is just cutting a small part of the loss; not setting a stop loss could lead to losing all your capital.
3. Trade less! The more you trade, the more mistakes you make
BTC perpetual contracts trade 24 hours a day, but beginners shouldn't trade every day — if you operate every day for 22 days in a month, you will eventually make mistakes. After making mistakes, your mindset can collapse, leading to 'revenge trading': holding onto losing positions and heavily investing, one mistake leads to another, and the losses may take years to recover.
The correct approach is to only seize high-probability opportunities, such as trend breaks and rebounds from key support levels, and stay out of the market at other times. Less trading leads to fewer mistakes, a stable mindset, and profits will naturally come.
4. Money management is crucial: these 3 rules must be remembered
Money management determines whether you can survive long-term, it's 10 times more important than trading skills:
Never go all in: even leaving 10% of your funds in cash can save you in extreme market conditions. I usually keep 10%-20% cash, occasionally engage in short-term trades within 24 hours, and cash out quickly;
Separate spot and contract trading: no leverage for spot trading, capturing long-term rising profits; use only 20%-30% of funds for contracts (up to 50% when the trend is clear), operating with low leverage to ensure risk isolation;
Don't spread your funds too thin: concentrate your efforts on 1-2 strong mainstream coins (like BTC, ETH), and avoid opening contracts for multiple coins simultaneously. Retail investors pursue 'profit', not 'maximizing returns'; spreading funds only increases risk without amplifying profits.
5. Reflect often and summarize: each trade requires a 'review'
After completing a trade, don't neglect it — review these few aspects:
Did you judge the long and short direction correctly?
Is the entry point appropriate?
Is the position size reasonable?
Are the take profit and stop loss set correctly?
Identify your weak points (e.g., 'not knowing how to find entry points') and focus on improvement. With long-term persistence, your trading system will become more refined, and your chances of making money will increase.
4. Final reminder: Contracts are high-risk games, safety first
Many people think 'you must first learn trading techniques', but I believe: these fundamental principles are more important than techniques. They are like the foundation of a building; once the foundation is solid, you can learn technical analysis and trading strategies to make money in the contract market.
Contracts are not 'ATMs', but 'high-risk battlefields'. Overcoming greed and panic, strictly adhering to discipline, and maintaining the bottom line of risk management will enable you to make money long-term in the crypto space.
I wish everyone can steadily establish themselves in the contract market and earn their share of profit!
