Introduction to perpetual contract trading: A practical manual that beginners can understand.
One, first clarify the core rules.
Understanding perpetual contracts requires mastering a few 'life-saving' rules; otherwise, it's easy to lose money in confusion.
Funding fees: Essentially, it's the long and short sides compensating each other, aiming to keep the contract price close to the spot price and avoid market bias. If you see a positive funding fee, it means longs have to pay shorts, indicating that long sentiment is too strong. Don’t chase the trend blindly; you might be buying at a high point. If you encounter a negative funding fee, it means shorts are paying longs, indicating strong short strength. Be cautious of potential price declines and don't easily try to catch the bottom.
Leverage: It's like putting a magnifying glass on profits and risks. For example, using 5x leverage means when you earn, your profits multiply by 5, and when you lose, your principal also loses by 5. Newbies should never be greedy; use at most 3-5x leverage. Even experienced traders shouldn't exceed 10x leverage. The higher the leverage, the faster you can lose your principal if the direction is wrong, and it's easy to 'blow up' overnight.
Marked price: Specifically used to prevent 'sneak attacks.' It doesn’t calculate profits and losses based on a single platform’s price, but rather takes the average spot price from multiple platforms into account, thus avoiding someone deliberately manipulating short-term prices to suddenly liquidate your position. For example, if there’s a sudden market plunge, as long as the marked price hasn’t reached your stop-loss line, you won’t be forcibly liquidated, giving you some buffer space.
Automatic position reduction: This is a 'risk-sharing mechanism' during extreme market conditions. When the market is extremely volatile and many people are close to liquidation, the system will first forcibly close the positions that have suffered the most losses and have the highest leverage, using the funds from these positions to compensate the profitable side, thus preventing issues in the overall market. In simple terms, it helps everyone bear part of the extreme risk, but you need to control your positions in advance to avoid being one of those reduced.
Two, the four-step trading method; beginners can follow it without panic.
Many people think trading is complicated, but following steps can reduce the chance of panic and mistakes. Remember these four steps.
Look at the big direction: First determine the trend before acting.
First, open the daily chart (it’s the most reliable for observing long-term trends) and focus on two indicators: First, the moving average; if the 30-day moving average is steadily above the 60-day moving average, it indicates a long-term uptrend (bullish). Conversely, if the 30-day moving average falls below the 60-day moving average, it signals a downtrend (bearish). Second, MACD; if the red bars are getting longer, it indicates strengthening long strength; if the green bars are getting longer, it indicates bearish strength. First set the big direction, then find entry points to significantly increase your win rate.
Finding entry points: Wait for 'safe signals' before entering.
Once the big direction is set, use the 4-hour or 1-hour chart to find specific entry points. For instance, looking at the 4-hour chart, if the price pulls back to the 'middle band' of the Bollinger Bands, and the RSI indicator bounces back up from below 40, this is a relatively safe entry point, similar to finding a 'low buy' opportunity in a trend. Another example is on the 1-hour chart; if the price breaks above the previous downtrend line, and the trading volume doubles compared to usual, it indicates that the breakout has real strength, making this a reliable entry point. Don’t buy recklessly without signals.
Set stop-loss: First calculate 'how much can I lose at most.'
Before buying, you must think clearly: How much loss can you accept at most? For example, if your principal is 10,000 yuan, you can accept a maximum loss of 500 yuan (which is 5% of your principal). Then calculate the stop-loss price based on this amount and set up an automatic stop-loss. When the stop-loss point is reached, the system will automatically close the position. Don’t be reluctant; holding on stubbornly often leads to larger losses, even losing the entire principal. Remember: stop-loss isn’t a loss; it’s about preserving the remaining principal for future gains.
Take profit and exit: Collect gains and don’t be greedy.
Don’t be greedy when making money; set a take-profit target in advance. For example, if you plan to make 10% profit, sell decisively when you reach that target. Don’t think 'I’ll sell once it goes up a bit more.' Often it’s greed that leads to giving back profits. Additionally, you can look at indicator signals for taking profit. For instance, if it’s originally a bullish trend, but suddenly the MACD red bars get shorter and green bars start appearing, or if the price breaks below the short-term moving average, it’s a signal that the trend is reversing. Quickly take profit and exit to secure your gains.
Three essential tools for beginners to avoid detours.
Good tools can save you time and avoid pitfalls. These 3 tools are essential for beginners.
Use TradingView for market observation: It’s free and easy to use, with ready-made templates for moving averages, MACD, and RSI. You can directly call them up without needing to set them up one by one. The interface is clear, allowing you to view multiple time frames at once. Whether checking the big trend or finding entry points, it’s very convenient and easy for beginners to get started.
Check funding fees using CoinGlass: No need to flip through multiple platforms. Just open CoinGlass's funding fee heat map, where red indicates positive funding fees and green indicates negative funding fees. You can quickly see current market sentiment. If there are many red areas, do fewer long trades; if there are many green areas, do fewer short trades. Follow the signals to avoid many pitfalls.
Practice using a demo account (recommended Bybit or Binance demo account): Don’t start trading with real money immediately; practice for at least 3 weeks on a demo account. The rules of the demo account are the same as the real account, and the funds are virtual, so losing won’t hurt. It’s just the right way to practice your skills and familiarize yourself with the process. Once your win rate on the demo account stabilizes above 65%, try using a small amount of real money (like 10% of your principal) to test it out. This way, the risk is much lower.
Finally: Three life-saving reminders, make sure to remember them.
Don’t take on too much position: Don’t let a single position exceed 30% of your principal. For example, if you have 10,000 yuan, the maximum you should invest in one contract is 3,000 yuan, keeping the rest in reserve. If you incur a loss, there’s still a chance to recover; don’t invest all your money at once.
Strictly follow the steps: Don’t trade based on feelings, even if the market is lively. Always check the big direction, find entry signals, set stop-loss and take profit. If conditions aren’t met, don’t act. Patience is more important than anything.
Staying alive is more important than anything: The market is always full of opportunities, especially during a bull market. As long as your principal is still there, there’s a chance to make money. Don’t rush for a moment, and don’t panic due to a single loss. Proper risk control is essential for long-term survival in the market.
