1. Analyze the market
In the cryptocurrency market, there are unilateral trends and volatile markets. Unilateral trends only occur for a period, showing either an upward or downward trend. This type of market is the easiest to trade; investors just need to buy low or sell high. In volatile markets, both long and short positions lack direction, making them unsuitable for medium to long-term trades; you can only trade short-term, buying high and selling low, and exit as soon as you make a profit.
2. Analyze the trend
The second step is to observe the trend, which can refer to daily, weekly, or monthly candlestick charts, and analyze the long-term factors affecting mainstream coins to determine whether mainstream coins will rise or fall over a period of time. If you analyze the trend before entering the market, blindly chasing prices can only lead to a dismal exit. After determining the trend, it’s time to set initial operational goals; it can be said that if you determine the trend well, you've already won half the battle.
3. Identify good entry points
After confirming a favorable trend, you still shouldn’t rush into the market. You should first choose good entry points; otherwise, it's easy to be forced out of the market. For example, recently in the cryptocurrency market, there was a consistent upward trend, but many long positions still suffered losses. Why? It’s because the entry points were not chosen well.
4. Choose the right timing
The cryptocurrency market has its own rules. Generally, from January to May each year is a rising season, so you can buy low. From May to September, the market experiences volatile trends and gradual decline; there are also certain increases in between, so high-selling and low-buying are key. In the second half of the year, there are often major declines or surges, which are also the most profitable times.
5. Control positions
Only by reasonably controlling your position can you have a stable opportunity for profit; otherwise, your account will only suffer losses. Generally, enter the market with 10% of your funds; if your account only has 10,000 USD, then each time you enter a trade, it's 1,000 USD, regardless of whether it’s long or short. In favorable market conditions, if you enter a profitable position, the stop-loss should be at the opening price. No matter how confident you are in the market, don’t take overly heavy positions. If your entry is at a loss, never add to your position against the trend unless you have hundreds of billions in funds to support it. Similarly, for an account of 5,000 USD, it's best to trade 500 USD positions.
BTC perpetual contract position management and leverage techniques
[Position Management]
Proper position management for contracts is crucial. For example, if you have 10,000 USD in your account, the best margin for your trades is 5-10%, which means 500-1,000 USD, or 50-100 lots. These 50-100 lots can be entered in 2 or 3 different positions.
[Additional Order Techniques]
If the leverage is the same for additional orders, the next step is to add positions, with a position ratio of 1:2:3, for example, the first order is 10 lots, the second order is 20 lots, and the third order is 30 lots; if the initial leverage is 20 times, the second order should be at the same position of 50 times, and the third order at 100 times, with a maximum of three orders. The total of these three orders should be one-tenth of your total position. Flexible leverage and position sizes will allow you to quickly recover or profit!
[Leverage Techniques]
1. The size of the leverage is determined by market conditions; in a large market, use long-term positions with small leverage to withstand risks.
2. Quick in and out, high leverage, quick returns; it’s generally recommended to take profits around 30-50% because market conditions change rapidly. We must learn to respect the market and know when to stop.
Finally, I remind everyone that having a slightly higher leverage in trading is not a problem, but you must manage your positions well. When trading, you must: maintain a correct attitude, study diligently, build positions scientifically, operate rigorously, control positions, adjust margins immediately after opening a position, and set take-profit and stop-loss levels. Avoid gambling and greed; enter and exit quickly, operate flexibly, and take profits timely. Do not oppose market trends or go all-in. Investing carries risks; proceed with caution.