I see many bloggers saying they opened 5x or 10x, and that the leverage is already quite small.
I really have no words. In fact, I want to tell you all, you are all wrong.
Leverage is not calculated this way at all. The leverage ratio calculated by the platform has nothing to do with you; it’s roughly the proportion that affects the platform's safety. You should calculate the risk based on stop-loss or the full principal.
With such a volatile crypto, it’s fine to open positions evenly in parts, around 10-20% of the principal each time, with a total maximum position of about 2 (short) to 4 (long) times the principal. The overall stop-loss risk at the same moment should be within 20% of the principal (or your psychological actual tolerance must be less than 20%). It is recommended to average the risk over time to 10%, which means there will be some periods of being in cash... Some may ask, then why do contracts at all... Hehe... Saying this may offend the entire crypto circle, but do you really want to earn coins or make money? Is there a more flexible speculative tool than contracts? Is the U-based really useless? In the face of a bear market, what is safer, coins or U? When you spend money, do you spend coins or U?
Dear friends in the crypto circle, doing contracts (pure speculation) is completely different from investing in cryptocurrencies (similar to venture capital), two entirely different professions.
The essence of contracts is trading risk. Or rather, using risk management and expectations to make money.
When doing contracts, you must clarify this statement.
You may not believe in technology, do not believe in manipulators, do not believe in K-line moving averages, do not believe in BTC, thinking they are all scammers. You can also believe in these things, these conceptual issues will not hinder your ability to make money.
But there is only one thing you must understand, and that is【risk】, what is risk, how to manage risk, how to calculate risk, how to operate risk, how to withdraw from risk... how to survive...
-------You cannot earn money beyond your cognitive range... Originally, if you invest in a coin and the coin value doubles, you earn 100%; then if you do a contract and make three times, resulting in earning 300%, where does that extra money come from? Do you know?
——For contract trading, what you earn is essentially the money from risk management, which is the money that others lose and are liquidated, given to you. And to get this money, first, you must not get liquidated...
In fact, looking at the market from the perspective of【risk】is completely different from how ordinary people look at the market. It's like looking at a mountain from the bottom versus looking at it from the top; they are not the same thing at all. For example, people buying coins can hold positions waiting for a rise, endure losses, and emphasize patience... But with contracts, if you hold a position waiting and endure losses, you probably won’t last past the first three episodes.
Therefore, operations truly based on【risk】management are completely different from operations based on【dreams】. In the trading market, dreaming costs money, while those managing【risk】are striving to get that money.
So, do you want to be a【dreamer】or a【risk manager】? It depends on yourself. However,【dreamers】should not play with contracts, as engaging in contracts will shatter the dreams you've been building for years in just a few days; that's too quick of a wake-up call.
Anyone who made a lot of money will have a feeling during the process: 'That period was almost like picking up money.' Almost, but—when your opportunity comes, that is to say: when it’s your turn to pick up money, you must be alive and have the capital to pick up money.
Yes, making money from contracts is not difficult... After all, there are so many people who liquidate and send money. They are racing on the edge of a cliff; you just need to wait at the bottom of the cliff and pick up some scraps to get by.
The difficulty lies in its inherent counterintuitive nature. Basically, you have to go against the ordinary people's ideas, like 'getting rich overnight.' Every time you are eager to increase your position or open a position, you need to think about what it means to 'go against human nature.'
…If buying coins is fishing, then doing contracts is stepping into the boxing ring... So I say having a lot of time in cash is very normal. Waiting, testing, retreating, trying again, waiting again... This is the norm for successful speculators.
In fact, a strategy over a period of time is almost always simple and clear, and one could say it is known to everyone.
For example, on February 14, 2022, many teams' operating strategies are: shorting most cryptocurrencies and timing to long BTC as a hedge.
There's not much to explain about the reasons. Imagine yourself as a big shot in the crypto circle and deduce from there. With such an absolutely profitable strategy, 80% of people who operate contracts can't make money.
And such a simple strategy actually contains countless details. For example, the principle of the simplest operation, why not short based on BTC directly, why shorting is much more conservative than going long, and the holding period is much shorter when shorting. For shorting, how to handle stop-loss, how to short various technical cryptocurrencies... Regarding contract stop-loss strategies, there needs to be theory, which is worth studying. The value of stop-loss theory is at least worth half of what you invested in the contract. If you can't find it, you have to derive one yourself (that's what I did, found someone, and they were unwilling to teach, so I deduced a set myself). A whole set of theory means a whole set of operations. If strictly executed, there will always be opportunities.
Trading is like this: superficially extremely simple, just one buy and one sell (a minute on stage), but behind it, countless people have done enough work (ten years of effort behind the scenes)... Overall, this is a profession. It doesn’t mean that novices can’t do it, but you must study and train seriously before you can truly step onto the stage.
I often compare flying a plane with speculation. The reason is that both are quite similar. If you forcefully try to fly a plane without knowing how, the result is a crash. If you forcefully try to speculate without knowing how, you're bound to get liquidated.
And risk management, stop-loss management, is equivalent to the most basic skills of piloting an airplane. With this, you can at least ensure that you won’t die.
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