In my years of navigating the crypto space, I've seen too many people dive into the contract market with dreams of getting rich, only to leave in disappointment. As someone who has climbed out of losses, I want to share practical insights from these years without fancy theories, just lessons learned from real money.
1. Trend Judgment: Use technical analysis as a foundation, with news as assistance
When I first entered the industry, I was particularly superstitious about the 'big player theory', always believing that the market was manipulated by large funds. Later, I found that the traders who can sustain profits are the ones who thoroughly understand technical analysis. Now, I mainly focus on three indicators: EMA moving averages, MACD, and trading volume. For example, when Bitcoin breaks above previous highs, if the trading volume increases simultaneously, this often signals the start of a trend. Last year, when expectations of Federal Reserve rate cuts rose, I opened a 20x long position when ETH broke $2800, setting a 3% trailing stop for every 5% increase, ultimately earning over three times my investment.
News can indeed bring short-term volatility, but blindly following trends can easily lead to pitfalls. Before a certain country's presidential speech in 2024, I saw on-chain data showing that whale addresses were increasing their BTC holdings, so I followed with a long position and made $6.83 million within 24 hours. However, I later realized that the key to news arbitrage is 'pre-positioning'; entering the market after news is released often turns one into a bag holder.
2. Arbitrage Strategies: The Secrets of Cross-Platform Price Differences and Volatility
Cross-platform arbitrage may sound complex, but it is actually simple to operate. Last year, the price of ETH on Binance was 0.5% lower than on Uniswap, so I immediately bought 100 ETH on Binance while selling on Uniswap, netting $4000 after deducting a 0.1% fee. However, such opportunities are fleeting and require tools to monitor price differences in real time.
Volatility arbitrage is a strategy I've been researching recently. When implied volatility exceeds the 90th percentile of historical data, I simultaneously buy call and put options to construct a Strangle strategy. During last year's surge in ETH volatility, I used this method to earn 60% of my principal within a week. However, this strategy is suited for highly volatile markets, as it can easily lead to losses in sideways markets.
3. Leveraging: A 5% principal stop-loss is a hard rule
Leverage is absolutely not better when it's higher. I've seen too many beginners jump in with 50x leverage, only to get liquidated from a small fluctuation. My current principle is: use 5-10x in volatile markets and a maximum of 20x in trending markets, and single losses must never exceed 5% of the principal. For example, for a $10,000 account, the single stop-loss line is $500.
Last year, during the intense fluctuations of ETH, I tried the 'long-short dual play' strategy: opening a short position during rapid price increases and flipping to a long position during declines, using 50x leverage to quickly switch positions. Although this high-frequency operation incurs high fees, I could still earn several thousand dollars in a day. However, this method requires extremely strong market monitoring ability, and beginners should use it cautiously.
4. Risk Control System: Surviving is more important than making money
When I first started trading contracts, I always thought about 'holding onto positions to break even', but the more I held, the more I lost. Now I strictly implement 'fixed percentage stop-loss'; if a single loss exceeds 2%, I immediately close the position. Once, when I shorted BTC and the price rose against me by 3%, I decisively cut my losses. Although I lost $2000, I avoided larger losses from a subsequent 10% crash.
In terms of position management, I never bet more than 10% of my funds on a single trade. I diversify investments across 3-5 cryptocurrencies, such as holding BTC, ETH, and BNB at the same time, so even if one cryptocurrency gets liquidated, it won’t hurt too much. When facing high-volatility events like policy announcements, I will reduce leverage to 3x and open positions in batches, starting with 50% and adding after confirming the trend.
5. Psychological Construction: A protracted battle against human weaknesses
FOMO (Fear of Missing Out) is the arch-enemy of contract trading. Last year, when Dogecoin surged, I watched others flaunt their profits and ended up chasing the market at a high point, resulting in liquidation that same day. Later, I set rules for myself: I will not enter the market without meeting my expected technical signals. Now, I've deleted all signal groups from my phone and only focus on on-chain data from Nansen and community signals from TradingView.
I learned from painful lessons that I should not arbitrarily increase positions when making profits, nor should I revenge trade when losing. Last year, during ETH's sharp decline, I bottom-fished with 50x leverage and took profits immediately after a 5% rebound. Although I earned less, I avoided the risk of a subsequent double bottom. Now, I document the rationale behind every trade and review my decisions weekly, summarizing patterns like 'don't chase long positions when RSI is overbought'.
6. Technical Tools: The Dimensionality Reduction Attack of AI and Quantitative Analysis
I now use TokenQuant's GPT-5 model to analyze social media sentiment and on-chain trading density. When the system identifies large whale addresses increasing their BTC holdings, it automatically triggers a long signal. Last year, this tool helped me seize three major market movements, achieving a win rate of over 70%.
I use the 3Commas quantitative trading system. Backtesting historical data revealed a strategy with an annualized return of 120% for 2024, with the maximum drawdown controlled within 15%. After optimizing the parameters, I'm now running it in real-time and achieving stable profits of about 8% per month. The smart copy trading function is also very useful, with a liquidation rate of only 12% for copy trading users on the XBIT platform, making it much less stressful than trading on my own.
7. Advanced Techniques: Event-Driven and Multi-Asset Linkage
Before and after events like the Federal Reserve's interest rate decisions and ETF approvals, market sentiment fluctuates greatly. Before the approval of the Bitcoin ETF in 2025, I bought call options, and then sold them for a tenfold profit after the price doubled. The key to this event-driven speculation is pre-positioning and promptly taking profits after the news lands.
Multi-asset linkage can effectively hedge risks. When I hold BTC, I will open an equivalent short contract to hedge against downside risks while buying call options to retain upside gains. This combination allowed me to avoid losses during last year's volatile market while not missing out on upward opportunities.
Contract trading in the crypto space is like a war without gunpowder; technical analysis is the weapon, risk control discipline is the armor, and psychological construction is the provisions. Over the years, I've seen too many people make money through luck only to lose it back with skill. Remember, the market is never short of opportunities; what it lacks is the capital to survive until those opportunities arise. In the era of quantum encryption and AI risk management, only continuous evolution of understanding and systematic strategies can help us stand firm in this brutal market.