Although I have been selling at high prices these two days, you can see that my entry cost is very low, and most of them have exploded. Someone asked me on Twitter how to find explosively-expanding coins like #drift #Swell and build positions early. I think it is better to share the money with others than to make money by myself, so I wrote this article.
First, let me tell you how I found this coin. In fact, the method of finding it is very simple. Just open (https://www.coinglass.com/zh/FundingRate) and you can see the funding rates of various exchanges.
Because we are looking for explosive coins, it is best to find coins with negative funding rates. Here is a brief explanation of why we need to find coins with negative funding rates. Funding rates exist to eliminate the difference between spot and contract prices. Negative funding rates mean that the contract price is lower than the spot price. Simply put, negative funding rates are a punishment for shorts and a reward for longs.
So why do coins with negative funding rates often skyrocket? Here is a simple logic. There are actually two ways for exchanges and market makers to erase the price difference between contracts and spot: pull contracts or smash spot. Smashing spot is the stupidest method. First of all, smashing spot means throwing away the low-priced chips in your hands. How can you start selling low-priced chips without making any money? Secondly, if you smash the spot, the contract price must also fall to keep consistent. As mentioned earlier, negative funding rates are a punishment for shorts. Smashing spot is equivalent to shorting contracts. Going short with negative funding rates, sometimes with high rates, is a way to maximize losses.
Therefore, for exchanges and market makers, pulling contracts is basically the only way to eliminate the price difference. First, they can get the reward of negative funding rate, and second, they can pull spot shipments at the same time. Best of both worlds!
After explaining the logic of finding explosive coins, let’s talk about how to open a position at a low cost. Here, I won’t talk about the messy technical analysis of MA, EMA, MACD, but the simplest logic that even a three-year-old child can understand: contract position. You can see it by clicking on the contract transaction data.
Why is the contract position important? Because the rising market must be caused by more buy orders than sell orders. If the positions do not fluctuate and change, there will be no market. Based on this logic, we focus on the contract positions. When the contract positions suddenly increase, such as rising by 20% or even doubling, this represents a very obvious signal: a large investor has opened a position, or even a banker has opened a position. We can only make money by following the large investors and bankers. If they open a position, we also open a position. If they run away, we also run away!
Finally, let's make a simple summary. First, look for coins with negative funding rates. The more negative the rate, the higher the probability of a sudden increase. Secondly, build positions based on changes in contract positions and follow the dealer to make money. I hope everyone will be inspired after reading this article. If you have any questions, you can also post them in the comment area. I wish you all make more money in the bull market. It would be even better if you can like and follow me!
