Five years ago, one early morning, I was awakened by the red alert at the exchange. In just three hours, my account with 6 million assets was entirely liquidated, leaving nothing. I watched the negative numbers constantly jumping on the computer screen, feeling like I was nailed to the cross of reality.
Only after understanding will one realize: the crypto market is not a casino, but a battlefield. I borrowed 120,000 in capital from friends, continuously summarizing failure cases, learning various trading techniques and strategies, and developed a trading method with a win rate of 90%. It took me 90 days to grow my funds to 20 million. It has not been easy!
Perpetual Contracts
Leverage Selection Guide: Why 100x Leverage May Be Your Optimal Solution?
1. The Underlying Logic of Perpetual Contracts
- Unlimited Holding: Can hold indefinitely as long as liquidation is not triggered
- Price Anchoring: Maintain linkage with spot through funding rates
- Leverage Freedom: Flexibly adjust leverage to fit different capital strategies.
2. The Core Formula for Leverage Selection: Risk × Efficiency = Return
1. The Nature of Risk: Leverage Risk
Depends on position control; 100x leverage can equate to low-leverage risk through scientific management.
2. Capital Efficiency Comparison (Example: BTC 4700U)
| Leverage Ratio | Margin | Occupancy Rate | Transaction Fee Impact |
|----------|--------|--------|------------|
| 1x | 4700U | 100% | Significant |
| 30x | 156.7U | 3.34% | High |
| 100x | 47U | 1% | Low |
Core Conclusion: 100x leverage requires only 1% of the principal to open a position, 99% of the funds can be reserved for risk, effectively avoiding transaction fee losses.
Three, 100x Leverage Practical Risk Control System
1. Position Management
- Single position margin ≤ 5% of total funds
- For a 5000U principal, it is recommended to hold positions ≤ 20 contracts (total margin ≤ 940U)
2. Dynamic Risk Control
- Fixed stop loss of 2-3%, 5% profit triggers a trailing stop loss.
- Daily lock-in profit target of 1-2%
3. Trading Discipline
- No holding positions; use the incremental position model.
- Daily trading ≤ 2 hours, avoid emotional trading
Four, Profit Calculation (5000U principal)
Table
Market Scenario Daily Profit Monthly Profit Risk Control Performance
Ideal Market 2% 3000U Controllable
Normal Fluctuation 1% 1000U Stable
Extreme Market Conditions -5% -500U Risk Isolation
Core Conclusion: Under strict risk control, 100x leverage can achieve low risk and high returns.
Five, Newcomer Pitfalls
1. 30x full position risk > 100x 5% position
2. Reserve 5% of the principal as maintenance margin to prevent forced liquidation.
Summary: 100x leverage is a tool for professional fund allocation; mastering scientific risk control can achieve efficient and stable trading.
Three Moving Averages to Help You Understand Trends
People often ask, 'Why do I always lose money in trading?' In reality, many times it is because they do not understand the trend! Today, I will share a 'three-line analysis method' that is simple, practical, and allows newcomers to quickly get started!
Core Tools: Three Key Moving Averages
Open the K-line chart and set these three lines; they can help you determine buying and selling timing:
- 5-day moving average (short-term trend): Reflects short-term price fluctuations, quick and sensitive.
- 20-day Moving Average (Mid-term Trend): Smooths out short-term interference, capturing mid-term direction;
- 60-day Moving Average (Long-term Trend): Determines the boundary between bulls and bears, with strong stability.
Four-Step Trading Rules (Recommended to Save)
1. Coin Selection Principle
Prioritize selecting coins with moving averages in a bullish arrangement (5-day > 20-day > 60-day) and stay away from coins in a bearish arrangement, which are 'downward traps'.
2. Timing of Entry
- If the coin price stabilizes above the 20-day moving average, it is safe to make small speculative trades;
- Break above the 60-day moving average and retrace without breaking; increase position allocation.
- Avoid chasing after short-term surges away from moving averages.
3. Exit Signals
- Break below the 5-day moving average, reduce position to avoid short-term risk;
- Effectively breaking below the 20-day moving average requires clearing positions to take profits or stop losses.
- If the 60-day moving average is broken, it indicates a trend reversal; exit decisively.
4. Practical Reminders
- No method is 100% accurate; it must be combined with trading volume, industry hotspots, and other auxiliary judgments;
- Strictly execute stop losses to avoid being 'trapped';
- Build positions in batches to diversify risk; do not put all your eggs in one basket.
Bloody Lesson: A friend once heavily invested based on news; although there was a brief limit-up, failing to set a stop loss, he was caught off guard when it broke below the 60-day moving average and ended up losing more than half. Remember: Trend is king, discipline is your shield, only then can you navigate the crypto market steadily!
Following the market trend is the most reliable beacon to success. In a sluggish market, do not attempt to catch the bottom, as that is merely a fantasy. When the market warms up and retraces, that is the golden opportunity for us to buy low, which is much safer than blindly holding the bottom. When selecting digital currencies, we need to cultivate discernment. Those coins that surge like meteors, whether mainstream or not, should be approached with caution. Their explosive growth may be accompanied by equally shocking corrections, and a slight misstep could lead to deep entrapment.
In the field of technical analysis, I particularly trust the MACD indicator.
++. When the DIF line and DEA line intertwine below the zero axis and successfully break through it, that is a good buying opportunity. Conversely, if they converge above the zero axis and extend downward, that is a signal to reduce positions.
As for averaging down, that is a thorny road that should not be entered lightly. Once a loss occurs, do not blindly average down; otherwise, you will only dig yourself deeper and may end up losing everything. Remember to decisively cut losses when losing, and only gradually increase positions when profitable.
Trading volume is also a crucial factor that cannot be ignored. When the coin price breaks through at a low point, if the trading volume significantly expands, it often indicates that a major opportunity is approaching.
And the most crucial point is to follow the trend. By combining the movements of daily lines, 30-day lines, 84-day lines, and 120-day lines, when one of these lines begins to show an upward turning point, you can clearly perceive the market direction and make correct decisions. The path of digital currency investment is fraught with risks but also holds infinite opportunities. Only by mastering the essence of capital management, trend analysis techniques, and having a discerning eye for selecting coins can you, like me, gradually rise from a small starting point to become a member of the middle class.
So, what do retail investors rely on to make money?
Perhaps many will say that short-term relies on technology while long-term relies on logic. In essence, short-term is driven by emotions, while long-term relies on value. Value itself also carries emotions; just like Bitcoin can be speculated to reach 70,000 and then drop back to 15,000, it is not that Bitcoin's value has changed, but rather the market's sentiment has shifted. Bitcoin remains Bitcoin.
Therefore, understanding market sentiment is equally important for long-term investment value. As for short-term trading, the so-called K-line technology is more a reflection of market sentiment. The way major funds draw K-lines completely depends on the overall market sentiment, whether there is follow-through buying, and whether there is market enthusiasm. It can be said that what is seen and heard on the K-line is what the funds want you to see, not a natural outcome of trading. The ultimate reflection of sentiment is trading volume.
Therefore, any rise or fall in cryptocurrency prices ultimately reflects in trading volume. There can be price only if there is volume; without volume, it can only decline. The first step for retail investors to combat emotions is to understand trading volume and only participate when there is volume; the principle is simple: volume means there is capital in operation, and without volume, capital is likely abandoning the cryptocurrency in the short term.
Why do short-term traders focus on hot spots? Because funds tend to gather, which can create a profit effect. Even for long-term bull coins and value investments, they are actually accompanied by trading volume; during periods of low volume and consolidation, one must continue to observe. Retail investors need to combat emotions; understanding trading volume alone does not solve problems; they must have their own trading principles.
The second step for retail investors to combat emotions is to set clear buying and selling conditions. Many retail traders buy and sell whimsically, buying when they want and selling when they want.
The buying point is basically when cryptocurrencies surge; if you don't buy now, they will take off. The selling point is when cryptocurrencies plummet; if you don't sell now, you will be deeply trapped. The emotional push to buy high and sell low is instinctive, stemming from the breakdown of retail investors' mindset and emotions amid market volatility. Retail investors must combat emotions; they should stop whimsically buying and selling, clarify their buying and selling points, and establish explicit principles for when to buy and when to sell, deciding before holding a position and not acting impulsively.
The third step to combat emotions is to understand patience and letting go. In the trading mindset of retail investors, there is another aspect that reflects human weakness, which is regret. You will regret why you didn't sell at the time, leading to a price drop and losses. You will regret why you didn't buy, causing you to miss out on price surges. Retail investors need to learn patience, which involves accepting floating losses.
As long as the investment logic does not change, it is necessary to accept floating losses; this is one of the situations that will inevitably occur on the investment path. No one can perfectly buy at the lowest point. Retail investors need to learn to let go; what they give up is missing out on opportunities. As long as cryptocurrencies do not align with their investment logic, even if the price continues to rise, they must not follow the trend to buy. They must understand the importance of letting go of rises that do not fall within their understanding.
Persist in learning and improve your understanding. I have summarized five key insights that are highly valuable; I hope those who come across this find it enlightening!
1. Do not rush to stop loss after a significant drop in early trading; it usually results from an overreaction to negative news from the previous night. You can wait for market repair and reversal. Do not blindly chase after a big rise at the end of the trading day; some major players like to test the market and induce buying, often leading to a low opening the next day to accumulate positions.
2. Effectively utilize trading volume, a practical technique, to gauge future market direction. If volume continues to shrink while prices rise, it indicates strong control by major players; if volume declines while prices fall, it means panic selling has not yet occurred, and the ice point has not been reached, so it will continue to drop.
3. Learn to observe the structure at the top of sectors. Typically, sector trends are formed by five waves: the first wave generates follow-through buying, the second wave washes out and adjusts, the third wave is the main rise, the fourth wave shows complex divergence, and the fifth wave pulls back to unload. In this process, the third wave has the largest increase, the first wave is next, and the fifth wave has the lowest. However, market conditions can vary widely; there may not always be five waves, so one cannot memorize blindly. When a sector leader rises, if the follow-up rally does not continue with the previous strength, it is highly likely that it has peaked.
4. Every time during the peak acceleration phase of Bitcoin, a certain sector's altcoins will surge, triggering a reversal in Bitcoin. Just check if the performances of major leaders have stopped falling and are rising again; then the index will likely follow suit.
5. Focus and specialization are crucial when starting, especially for newcomers to the market. Studying one method and mastering its techniques is far more rewarding than trying to learn multiple skills at once. Wanting too much can lead to loss; lack of specialization can easily lead to being punished by the market. Do not switch methods casually; calm down and learn. Gradually, you will improve and achieve stable profits before learning more techniques to integrate.
Life must experience ups and downs to achieve great enlightenment! As long as you do not give up, the more you try, the closer you are to success. What is truly great in life is not having done something, but having dedicated oneself to a single endeavor throughout life.
Welcome to follow Huihui; you can learn and communicate through real trading, and clearly understand market direction and strategies. No matter what the market style is, knowing in advance allows more time for better mastery!
Huihui only engages in real trading, and if there are spots in the trading team, come quickly!
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