1. Contracts are essentially just a tool.
Before I started getting involved in contracts, I heard various opinions. Some believe contracts are like a flood beast, while others think it's a machine for getting rich quickly. But in reality, it is just a tool; the key is how to use it. Generally, large funds use it for asset hedging, that is, for protection; however, many people treat it as a way to get rich (I initially had this thought too). This is a zero-sum market; if someone profits, someone must lose, and coupled with transaction platform fees and possible market manipulation by speculators, retail investors find themselves in a challenging position. Saying contracts are like a meat grinder is not an exaggeration; if one wants to survive in this field, they must grasp the survival rules within it; only the fittest can survive.
2. It is essential to set a stop-loss when opening a position (please repeat this in your mind three times).
The stop-loss magnitude can be between 1 to 100 points, specifically determined by the position ratio.
3. The so-called 'method of eternal profit+'
Set stop-loss at the original price, first use one-tenth of the position for trial trading. If your trend judgment is correct, continue to increase the position and then take profit during the pullback. It sounds beautiful, but reality is very cruel. First, judging the trend is extremely difficult, and the market mainly operates in a volatile manner, making opportunities to capture one-sided market movements very few. Secondly, even if the judgment is correct, continuing to increase the position will raise the original opening price, and any small pullback may trigger the original stop-loss, and frequent operations lead to astonishing fees. Although doing it right once can multiply the principal several times or even hundreds or thousands of times, doing so long-term will ultimately just work for the trading platform, with no sustainability, unless you make a profit and immediately leave.
4. Newcomers often do not like to set stop-losses.
I have also walked through this stage. Once the emotion of loss aversion is amplified, it can cause people to crazily hold positions, thereby infinitely expanding risks. Once the capital chain breaks, you can only watch as your account is liquidated, and often you are liquidated before you even realize it. What started as an intention to earn one-tenth of the profit ends up losing all the principal.
5. There are methods to always make a profit in contracts, but they are definitely not something a newcomer to this field can grasp.
Many people participate in contract trading to earn big money with small funds, and there are only two ways to earn a lot: one is to win by position, which means heavy positions; the other is to win by magnitude, such as large declines like 312 or 519, or large increases like going from 10,000 to 60,000. To capture such magnitude market movements, any analysis may be useless; there is only one way: do not take profits. The most clever way to take profits is not to take profits, but this is extremely counterintuitive. Out of 100 times, even 90 times may result in losses or breaking even, and I cannot achieve that. With small positions, even if the magnitude is large, you cannot make big money; with large positions, small magnitudes are useless, and they are more prone to liquidation. All those who make big money are experts who can balance positions and magnitude.
6. The market is unpredictable, just like there are no constant conditions in warfare, and water has no fixed form.
The market always develops in the direction of least resistance. Betting on trends and guessing sizes are fundamentally the same; learning a lot of technical analysis may not help at all. Being able to read K-lines and some basics is basically enough. Technical analysis is not difficult; just remember this sentence: if the trend is upward, it will continue to rise; if the trend is downward, it will continue to decline; if it has risen a lot but retraced little, it will rise even higher; if it has dropped a lot but only rebounded slightly, it will continue to fall. The larger the cycle, the more valid this rule is. Once you understand these, you have grasped the core principles of technical analysis.
7. The ones who can truly make big money are certainly those in the trend.
When rolling positions in a trend, it’s fine to operate back and forth with small positions during a sideways market, but if this trading habit is formed, it will be very difficult to hope for wealth in a lifetime. Short-term trading, although it brings quick money, also incurs quick losses, and over time, the money earned may not even cover the transaction fees. If you think you are the chosen one, then give it a try, but know that losing money often starts from winning.
8. The timing of entry is very important; many operations leading to losses are caused by the fear of missing out.
When there are no positions, during a decline, wait for a rebound before shorting, and remember not to chase the decline; during an increase, also wait for a pullback before entering, do not chase the rise. Doing so may cause you to miss some strong trend movements, but most of the time it will be safer. However, many people only see profit and ignore risk, and in the end, they blame others for making them miss out.
Do not be afraid.
Many people are afraid of losing in the futures market and no longer dare to open positions. When they trade again, they become hesitant and indecisive. Losses can lead to an overly strong purpose in what they do, an excessive desire for results, always thinking about making a profit, wanting to avoid losses, and wanting to do everything right. This mentality cannot yield profits. The ancients said, 'Do not rejoice at gains, nor be sad at losses.' In trading, this can be understood as: do not rejoice in profits nor be saddened by losses. When your heart is calm enough, you will achieve something. Trade with the same enthusiasm and passion you had on your first day in futures; do not fear the wolf in front and the tiger behind. If you are wrong, stop-loss; if you are right, hold on. Do not rush to exit before the trend reverses; otherwise, you will only miss out.
10. Enthusiasm.
No matter what you go through, maintain enthusiasm and passion, 'harboring a beautiful yearning for life.' Be as full of fighting spirit as you were on your first job, and love boldly as you did in your first romance. Many things in life are like this; whether in career or love, there may not always be a result, and the probability is that there won't be. But if you don't work hard and contribute, there will definitely be no results. Just focus on doing what you need to do and don't worry too much about the outcome.
11. Many people are always thinking about opening positions, even operating with full positions. For them, being flat is more uncomfortable than losing money.
In fact, the time for trend markets is often very short; controlling retracements is the most important. How to control retracements? Sitting on the sidelines is the best method. Don't always think about capturing every segment of the market; seizing one or two opportunities a year is enough. Missing out is very normal; there's no need to regret it. As long as you are still in this market and live long enough, there will be plenty of opportunities in the future. Time is the only chip for retail investors; maintain a calm mind, wait patiently, and making money is just a byproduct; enjoying life is fundamental.
12. The mindset and insights of trading.
In trading, the mindset is more important. Knowledge is like skills, while mindset is internal strength. Just like Qiao Feng using the Taizu Long Fist can defeat several Shaolin masters, it's because he has profound internal strength. Being able to see clearly is not very useful; what's important is what to do after seeing clearly, what to do after making a mistake, how to maintain composure in holding positions, how to have a good mindset, how to not fear missing out, how to not fear retracement... If one always holds a mentality of wanting to win and fearing loss, it is very difficult to make money in this market. Some things newcomers may not experience right away, but after spending enough time in this market, they will come to understand that these are truths.
The journey of trading cryptocurrencies can be described as a novel! After repeatedly summarizing nine key points, I now share them with all contract friends.
1. If your initial capital is not very large, for example, within 100,000, catching a significant fluctuation once a day is already sufficient. Do not be greedy; always hold positions!
When encountering significant positive news, if you don't sell on that day, remember to sell at the high opening the next day. Positive news often turns into negative news.
3. The news and holidays are also very important. When encountering major events, one should make adjustments in advance (reduce positions or even go flat). Historically, whenever there are major events, the market will inevitably experience significant fluctuations. If you cannot grasp the direction in advance, then wait for the market to come and follow its trend!
4. The strategy for medium to long-term should definitely be light positions, leaving enough room for operation. Steady operation is the best strategy; do not operate with heavy positions!
Short-term trading focuses on following the trend, entering and exiting quickly. Avoid greed and hesitation. In a market with significant rises and falls, look for suitable points to enter. If the market is sluggish and inactive, then go flat and wait patiently.
6. When the market fluctuates slowly, rebounds will also be slow; when the market fluctuates quickly, the corresponding pullbacks will also be rapid!
7. If you enter at the wrong point, you should stop-loss promptly (do not hesitate to hold the position). Stop-loss is a form of profit; preserving capital is the fundamental principle of survival in the market.
8. You must look at the 15-minute K-line chart for short-term trading; the KDJ indicator can better capture suitable entry positions.
9. There are countless techniques and methods for trading cryptocurrencies, but the most important thing is the mindset. A person's mindset is crucial, and it can easily allow you to experience the highs and lows of the market, so adjust your mindset and avoid excessive greed.
What is Bitcoin liquidation?
Liquidation, also known as the threshold for being forcibly liquidated, refers to situations in leveraged contract trading where, due to severe market fluctuations, your leveraged trading account suffers significant losses due to price drops, making it insufficient to maintain positions. If you do not timely top up your margin after receiving a 'liquidation warning,' the exchange may forcibly initiate the liquidation mechanism, selling your assets to prevent larger losses.
What is Bitcoin liquidation?
In simple terms, it means: your money is gone in a snap.
And precisely because your account has no money, the exchange automatically helps you liquidate, so you won't incur more debt. During the liquidation process, the exchange will forcibly close the investor's positions at current market prices and charge a certain 'liquidation fee'. (Yes, you have lost your bet and still have to pay fees beyond the transaction fee.)
And the remaining margin (if there is any) will be refunded to the investor's account. It is worth noting that during significant market fluctuations, the liquidation price may be worse than the trigger price, which is known as 'slippage.'
Overall, the liquidation and clearing processes of cryptocurrencies differ from stocks. When cryptocurrencies are liquidated, you only lose your principal. However, in the stock market, encountering extreme market conditions may lead to owing money to the brokerage if not careful, and in severe cases, you may even assume the responsibility for defaulting on settlements.
In the cryptocurrency market, mastering the seven major trading principles is essential to deeply understand the ins and outs of investment, allowing you to be stable in the wind and to turn danger into safety in traps. Having navigated the market for many years, I am well aware of the opportunities and traps within. If your investments are not going smoothly and you feel discontent about your losses, you can contact me, Chen Ge, and I will correct your past mistakes. If you are now profitable, I will teach you how to protect your profits. If you are still lost in the market, I am willing to guide you forward. The true tragedy of trading does not lie in how much suffering you endure, but in how many opportunities you miss! Seize the present, and let’s move forward together. I am Chen Ge, a person who aims to leave a name in the cryptocurrency world.
