Introduction: Why is contract trading an accelerator for wealth?
In the cryptocurrency market, spot trading can earn you money, but contract trading can make you rich.
Core advantages of contract trading:
Leverage (1-100 times, small funds can leverage large profits)
Win-win for both long and short (going long in a bull market, going short in a bear market, profitable in all weather)
Efficient arbitrage (hedging, grid trading, cross-period arbitrage, and other strategies)
But high returns come with high risks! 90% of retail investors go bankrupt due to lack of risk control. This guide will teach you how to scientifically navigate contracts and avoid becoming 'cut-down leeks.'
Chapter 1: Basics of contract trading - essential concepts
1. What is contract trading?
Perpetual contracts (no expiration date, funding rate adjusts price)
Delivery contracts (fixed settlement date, such as weekly contracts, quarterly contracts)
USDT-based vs coin-based (stablecoin settlement or cryptocurrency settlement)
2. Leverage and margin calculation
Leverage multiple (1x-125x, the higher the risk)
Margin = Contract value / Leverage
Liquidation price calculation(Taking BTC 10x leverage as an example):
Buying price: $60,000
Margin: $6,000
Liquidation price ≈ $54,000 (10% drop)
3. Key terminology analysis
Open position/close position (buy or sell contracts)
Long/short (bullish or bearish)
Forced liquidation (margin call) (insufficient margin, system forced liquidation)
Funding rate (funding settlement for both long and short sides of perpetual contracts)
Chapter 2: Core strategies for contract trading (guaranteed profit without liquidation)
3. Key terminology analysis
Open position/close position (buy or sell contracts)
Long/short (bullish or bearish)
Forced liquidation (margin call) (insufficient margin, system forced liquidation)
Funding rate (funding settlement for both long and short sides of perpetual contracts)
Chapter 2: Core strategies for contract trading (guaranteed profit without liquidation)
1. Trend-following strategy (most suitable for beginners)
Core logic: Go with the trend, do not take contrary positions!
Bull market: only long, buy on pullbacks
Bear market: only short, short on rebounds
Real case:
In January 2024, BTC broke 42,000 and trended upwards, 10x long from 42,000 to 52,000, profit 23.8%!
2. Breakout trading method (high win rate strategy)
Core logic: chase the rise and kill the fall after a sideways breakout!
Steps:
Observe key resistance/support levels (e.g., $60,000)
Open position after volume breakout (5-10x leverage)
Set stop-loss at pre-breakout low (e.g., $58,000)
Real case:
In December 2023, ETH surged from 2,400 to 2,800 after breaking 2,400, 10x long profit 16.6%!
3. Grid trading (best for volatile markets)
Core logic: Buy low and sell high, automate arbitrage!
Set price range (e.g., BTC 50,000−50,000−60,000)
Buy every 5% drop, sell every 5% rise
Suitable for 3-5x leverage, avoid liquidation in one-sided markets
Real case:
In February 2024, SOL fluctuated in the range of 80−80−100, grid returns can reach an annualized 120%!
4. Hedging arbitrage (low-risk strategy)
Core logic: Make money from price differences!
Cross-exchange arbitrage
Spot-futures arbitrage (spot price vs contract price difference)
Real case:
In March 2024, ETH spot at 3,500, quarterly contract at 3,500, quarterly contract at 3,600, short contract + buy spot, arbitrage 2.8%!
Chapter 3: Advanced techniques - institutional-level trading methods
1. Order flow analysis (identifying major trends)
Large buy/sell orders (whale funding entry signals)
Hidden orders (manipulation tactics by manipulators)
2. Sentiment indicators combined with technical analysis
Fear and greed index < 20 → bottom-buying opportunity!
Extreme bullish/bearish ratio at exchanges → reversal signal!
3. Options + contract combination (hedging risks)
Buy put options + go long on contracts (downside protection)
Sell call options + short contracts (enhanced returns)
Chapter 4: Risk control system - survive to make big money
1. Strict stop-loss (the first killer of liquidation)
Single loss not exceeding 2% of principal!
The higher the leverage, the tighter the stop-loss!
2. Position management (the core of the core)
5x leverage: max 20% position
10x leverage: max 10% position
Over 20x leverage: no more than 5% position
3. Avoid common mistakes
Do not hold positions! (Losses in adding positions = suicide)
Do not go all in! (One mistake = zero)
Do not trade frequently! (Transaction fees eat up profits)
Chapter 5: Contract trading opportunities in 2025
1. Bitcoin halving market (April 2024)
Historical pattern: Surge 6-12 months after halving!
Strategy: Low leverage (5x) long, target $100,000+
2. Ethereum ETF expectations (second half of 2025)
Could replicate BTC ETF trends after passing!
Strategy: Chase after breaking $4,000 with 10x leverage
3. Altcoin season (2025)
Small coins experience wild fluctuations, suitable for short-term contracts!
Strategy: 3-5x leverage, quick in and out
Final conclusion: Contract trading = realization of cognition
Trend + breakout + grid = stable profit combination!
High leverage = high risk, always control your position!
The bull market in 2024 is the best opportunity for contract trading!
Remember: The market is never short of opportunities, what is lacking is patience and discipline!
Take action now!
Choose a reliable exchange
Start practicing with small funds + low leverage
Strictly execute trading plan
(Risk warning: Contract trading is extremely risky and may lead to total loss of principal, please operate cautiously!)
Trading is not about getting rich in one go, but about reasonable profits, achieving long-term, stable, sustainable, and high-probability results, thereby continuously acquiring wealth.
Professionals create value, details determine success or failure. If you feel helpless or confused trading in the crypto space, I hope my sharing can bring you some inspiration and help!
Old Wang only does real trading, the team still has positions, hurry to #非农就业数据来袭 $BTC
