There is a very simple method for trading cryptocurrencies that almost guarantees 100% profit. I made over 80 million using this method.
1. Only engage in high selling and low buying of BTC/ETH.
2. Mainly use the important moving average group above the 4H level to determine the entry points for short positions in batches. For example, if the MA60 moving average above the 4H level continuously suppresses the price, then use this moving average as the timing for entering short positions. Stop loss: set it above the previous high after a spike upwards and then a pullback. For instance, if the resistance level is at 2440, and the spike reaches 2450, then set the stop loss above 2450.
3. Generally, use the support below the same level or one higher level as the entry points for long positions in batches. Stop loss: set it below the previous low after a spike downwards and then a rise. For example, if the support level is at 2320, and the spike reaches 2310, then set the stop loss below 2310, around 2300.
4. Stop-loss principal: 20% of the total principal; if reached, no more orders will be opened that day. Daily operations generally focus on two transactions, with each stop-loss controlled at 10%. The size of each position opened should remain consistent.
5. Try to enter the market in batches, do not go all in at once! Try to follow the trend when opening positions. If the main trend is bearish, try to open short positions, and vice versa.
① When the overall market trend is good, chase hot coins.
② Control the profit-loss ratio, keeping it around 3:1.
③ Daily stop-loss drawdown is 15%-20% of the principal; if reached, no more orders will be opened that day.
④ Daily Review
6. Dumping Market: Wait in a short position to enter in batches; if there is no opportunity, just wait in a short position. In this market, not losing money is equivalent to making money.
7. Guaranteed Profit Stop-Loss: When the daily opening order has not triggered a stop-loss and the same level K-line pattern has not shown any pattern damage, you can choose not to have a guaranteed profit stop-loss pattern! If either condition is not met, then you must have a guaranteed profit. ETH: Guarantee profit after 20 points floating profit BTC: Guarantee profit after 350 points floating profit.
8. Moving Stop-Loss: ETH: Use moving stop-loss after 35 points floating profit, using 3/5 minute intervals. BTC: Use moving stop-loss after 500 points floating profit, using 3/5 minute intervals.
9. 1. Never think of hitting it big in one go, 2. Only trade within your own market! Learn to stay out of the market, don’t force trades. 3. Do not open night positions, 4. Avoid opening positions on weekends. 5. After a stop-loss, control your mindset.
Trading virtual currency perpetual contracts can still be quite troublesome. Currently, exchanges like OKEx, Binance, Huobi, etc., all support perpetual contract trading. Virtual currency perpetual contracts are a type of financial derivative traded based on virtual currencies, with no fixed execution period, allowing investors to hold contracts for a long time. Players can amplify potential profits or losses through leveraged trading, but they need to pay attention to managing risks, such as setting stop-loss orders and limit orders to control the extent of losses. Below is how to play virtual currency well.
Definition of perpetual contracts:
Perpetual contracts, also known as perpetual futures contracts, are a way of trading derivatives. Users can go long (Long), go short (Short), and engage in arbitrage using perpetual contracts to obtain returns higher than the invested principal.
Operation principle of perpetual contracts:
The operation logic of perpetual contracts allows investors to borrow virtual currencies and buy or sell virtual currencies at a specific price at a future point in time. For example, if one believes the price of a certain virtual currency will rise, they can borrow funds to buy that currency and then sell it when the price rises, earning the differential.
Why is it called a 'contract'?
Virtual currency contract trading is derived from traditional commodity futures trading. In traditional futures trading, traders need to sign contracts when going long or short on the future price of a certain commodity, which is also the reason perpetual contracts are named as such.
Funding Rate:
In perpetual contract trading, if there is borrowing, there will be interest rates. If there are more short positions than long positions, it indicates that most people are borrowing ETH, and at this time the funding rate is negative. Conversely, if there are more long positions, they will need to pay interest to the short positions, making the funding rate positive. The role of the funding rate is to prevent extreme market conditions, by charging funding fees to increase the opening costs for the stronger side of the market.
Leverage
As the name suggests, it amplifies your capital leverage. Just like using a small lever to lift a heavy stone, leverage allows you to trade with a larger amount of money using a small sum. For example, as stated in the image, 5x leverage means you can control a Bitcoin trade worth 5 USDT with just 1 USDT.
Doesn't it sound great? But be careful! Leverage can amplify profits but also losses. If the market moves against you slightly, you might end up losing more money. Therefore, when choosing leverage, be sure to consider carefully and don’t choose too high a multiple. After all, most people who say 'I play contracts well, my family has two houses' are not just joking.
On the Binance trading interface, you will see two options: Cross Margin and Isolated Margin (also known as Single Margin).
Cross Margin Mode: As the name suggests, all the money in your account is counted. If you lose, everyone bears it together. If you have multiple positions and one position loses heavily, the platform will draw money from other parts of your account to support it until all the money is lost. In this mode, the risk is shared.
Cross Margin is suitable for those who are bold and careful, as they believe they can withstand temporary fluctuations using all their account funds. However, if there isn’t much money in the account, the risk of liquidation is very high.
Isolated Margin Mode: In contrast, isolated margin is like having a small 'independent vault' for each position. You can allocate fixed margin for each position, and if one position incurs a loss, it will only lose that portion of money without affecting the entire account. This mode is more suitable for conservative players, so even if one position is liquidated, other positions remain intact.
For example: If you have 1000 USDT, in cross margin mode, if one position loses, the platform will automatically use this 1000 USDT to support you; while in isolated margin mode, you can allocate 500 USDT for each position. If one position loses all, it won’t touch the money in another position.
Take profit and stop loss, as the name suggests, is to help you set expectations for profits or losses in advance, allowing the trading platform to automatically close positions when these prices are reached. This is to prevent sudden market changes from causing you to incur heavy losses before you can react.
Take Profit: When the price reaches your set high point, the system will automatically sell for you, locking in profits.
Stop Loss: When the price drops to your set bottom line, the system will help you stop-loss in a timely manner to prevent further losses.
However, setting take profit and stop loss should not only consider the latest price but also the 'mark price.'
What is the difference between the mark price and the latest price?
Latest Price: This is easy to understand, it’s the most recent transaction price in the market, which fluctuates every second. If you are more concerned about real-time market fluctuations, you can usually set take profit/stop loss using the latest price. In this case, as long as the latest transaction price reaches your set point, the system will automatically close your position.
Mark Price: The mark price is a bit more complex; it is a smoother, more stable reference price calculated by the platform based on market price, funding rate, and other factors. Its existence is to prevent your position from being unnecessarily liquidated due to sharp price fluctuations in a short time.
You can think of the mark price as the platform's 'mental price', generally more stable than the latest price. If you don't want to be 'mis-killed' by short-term market fluctuations, you can refer to the mark price to set take profit and stop loss.
For example: You set a stop-loss order to sell when Bitcoin drops to 63200 USDT. If you set it using the latest price, the system will immediately help you sell when the latest price reaches 63200 USDT. But if the market suddenly undergoes significant fluctuations, you might be liquidated earlier than this price. If you set the stop-loss using the mark price, it can be more stable during large fluctuations, avoiding some 'false drops' that might liquidate you.
Opening position, closing position, going long, going short.
These are all terms in trading. Actually, it's quite simple; let's break them down.
Opening Position: Opening a position means establishing a new position, deciding whether to buy or sell.
Going Long: You expect the price to rise, so you buy the asset (like Bitcoin), and wait to sell it after it rises. This is going long.
Short Selling: You are bearish and believe the price will fall, so you first borrow the asset and sell it, waiting for the price to drop before buying it back to repay. This is short selling.
Closing Position: In simple terms, it means ending the position you have opened. Closing a long position means selling what you bought, and closing a short position means buying back what you borrowed and sold.
What does funding rate/countdown mean?
Funding rate is a unique mechanism of perpetual contracts. Every 8 hours, long and short positions pay each other a fee. If the rate is positive, it means longs pay shorts; if negative, shorts pay longs. This is actually a way for the platform to adjust market supply and demand to prevent one-sided markets.
Countdown refers to the time until the next funding rate settlement. When the countdown ends, if you hold a position, you will either pay a fee or receive a fee, depending on whether you are long or short.
Having listened to me ramble so much, you may have a new understanding of contract trading. Although it looks enticing, the risks are equally huge. Leverage gives you the chance to risk a little for a lot, but it may also leave you with nothing.
Therefore, cautious trading and good risk control are the way.
Three methods for funding fee arbitrage:
1) Single currency single exchange arbitrage (most common)
Specific operation steps:
a. Determine direction: If the funding rate is positive and longs pay fees, it is suitable to short contracts and go long on the spot.
b. Establish positions: Short perpetual contracts + Long spot.
c. Collect funding fees: If the underlying asset's spot price rises, the short contracts in the combination lose money. The losses of both are offset, but the long futures contract needs to pay you the funding fee, thus earning funding fee revenue.
2) Single currency cross-exchange arbitrage.
Specific operation steps:
a. Scan the funding rates of exchanges: Choose two exchanges with sufficient liquidity and large differences in funding rates.
b. Establish positions: Short perpetual contract (Exchange A) + Long perpetual contract (Exchange B).
c. Earn funding fee differentials: Earn differentials based on the funding rates of different exchanges
3) Multi-Currency Arbitrage
Specific operation steps:
a. Choose highly correlated currencies: These are currencies that move in the same direction. Use funding rate differentials to hedge the position direction and earn profits.
b. Establish positions: Short high funding rate currency (e.g., BTC) + Long low funding rate currency (e.g., ETH), adjusting positions according to the ratio.
c. Earn profits: Funding rate difference + volatility profit.
Among the three methods mentioned above, the difficulty increases successively, with the first method being the most common in practical operations. The second and third methods have extremely high requirements for execution efficiency and trading delays. Leveraging can also be added to enhance arbitrage, but this requires higher risk control standards and carries more risk.
Additionally, based on funding fee arbitrage, there are more advanced practices such as combining spread arbitrage and term arbitrage to enhance returns and improve capital efficiency. Spread arbitrage refers to taking advantage of price differences of the same underlying asset across different exchanges (spot and perpetual contracts), and when the market fluctuates significantly or liquidity is unevenly distributed, funding fee arbitrage can be combined with spread arbitrage to further enhance the strategy's yield; term arbitrage refers to taking advantage of price differences between perpetual contracts and traditional futures contracts. The funding rate of perpetual contracts changes with market sentiment, while traditional futures contracts are for settlement, thus creating a certain price differential relationship.
In summary, regardless of which hedging arbitrage method is used, it is essential to achieve complete risk hedging against price fluctuations; otherwise, profits will be eroded. Additionally, consider costs such as transaction fees, borrowing costs (if leveraged), slippage, margin utilization, etc. With the overall market maturing, the returns from simple strategies will diminish, and combining algorithmic monitoring, cross-platform arbitrage, and dynamic position management will be necessary for sustained profits. More advanced arbitrage + spread models require high execution efficiency and market monitoring capabilities, suitable for institutions with certain technical capabilities and risk control systems or quantitative trading teams.
I am Ah Peng, with rich market experience across multiple financial sectors after experiencing many bull and bear cycles. Here, penetrate the fog of information to discover the real market. Seize more wealth opportunity codes and discover truly valuable opportunities, don’t miss out and regret later!
I am Ah Peng, with rich market experience across multiple financial sectors after experiencing many bull and bear cycles. Here, penetrate the fog of information to discover the real market. Seize more wealth opportunity codes and discover truly valuable opportunities, don’t miss out and regret later!
