I. Contract Leverage
The misconception of leverage: Many beginners believe that the higher the leverage, the greater the risk. In fact, the risk of leverage itself is unrelated to the multiplier. The key lies in trend judgment, entry points, and position management. For example, the profit and loss fluctuations of 1x leverage and 100x leverage are the same; it mainly depends on whether you have correctly judged the market trend.
Choosing Leverage: I personally prefer 100x leverage because the margin requirement is small, allowing for higher multiples when averaging down. Averaging down is meant to compensate for imperfect entry points, not to increase risk.
II. Averaging Down and Position Management
Averaging down: When averaging down, choose positions near support and resistance levels, appropriately increasing your position (two or three times the position) to quickly profit and reduce risk.
Position management: My experience is to always maintain a 25% position, regardless of market fluctuations, to avoid the risks associated with high positions. Keeping the position small allows for better handling of unforeseen market fluctuations.
III. Take Profit and Stop Loss
Take profit: Beginners often let profits reverse due to greed. It is important to take profits in time to lock in what has been earned. For example, after making a profit, observe market trends and gradually sell a portion of your position while keeping the remaining position.
Stop loss: Stop loss is more important than take profit. When the trend is not favorable, stop loss in time to avoid significant losses from market reversals. It is best to set the stop loss near support or resistance levels and not to hold onto losing positions. Especially when the market shows a one-sided trend, not stopping loss can lead to increased losses or even liquidation.
IV. Support and Resistance Levels
Support level: This is the position that rebounds after multiple declines, indicating strong buying interest.
Resistance level: This is the point where prices are repeatedly blocked from rising, indicating strong selling interest.
Support and resistance levels vary with each cycle, and it is important to select the appropriate support and resistance based on the current cycle. The support and resistance levels of larger cycles have more reference value.
V. Frequent Operations
Frequent opening of long and short positions is a common problem for beginners, often leading to greater losses, with fees eating up most of the profits. Control your trading frequency and wait for better opportunities. The market presents opportunities every day; there is no need to rush. The focus should be on choosing the right timing and precise operations, rather than frequent entries and exits.
VI. Buy the Dip Rules
A strong cryptocurrency continuously declining for 9 days at a high position is a good time to buy the dip. This kind of retracement indicates a market low point, and buying at this time can lay the foundation for future gains. Such opportunities are rare; once they appear, enter decisively without hesitation.
VII. Take Profit Rules
If a cryptocurrency rises consecutively for two days, consider reducing your position in time to lock in profits. There is no cryptocurrency that only rises and never falls; even during a rising period, you should sell in time to avoid losing profits due to excessive greed.
