Years ago, I experienced a painful lesson of account liquidation within just five days, losing over six million. As someone who has been through this, I sincerely advise all newcomers to the cryptocurrency world to tread carefully and even temporarily refrain from trading, as this can be a wise move to prevent major losses. It is crucial to recognize your limits and act within them.
Since February this year, I have achieved a remarkable leap from 50,000 to over 20 million in just nine months with one account. Today, I am willing to selflessly share my trading strategies and insights with every partner who loves the cryptocurrency world.
As the saying goes, standing on the shoulders of giants can help you reach the shores of success more quickly. I hope my experience can be a valuable support on your journey.
Additionally, at the end of this article, I will reveal a crucial profit system that is the essence I have derived from years of experience in the cryptocurrency world. If you are fortunate enough to read this and eager to improve your skills in cryptocurrency trading, please take your time to savor it, study it in depth, and consider saving it for future reference.
What is leverage? Can it not kill me?
Leverage, as the name suggests, magnifies your capital leverage. Just like using a small lever to lift a big stone, leverage allows you to make larger trades with a small amount of money. For example, the 5x leverage mentioned in the diagram means you can control a Bitcoin trade worth 5 USDT with 1 USDT.
Sounds great, right? But be careful! Leverage can magnify profits, but it can also amplify losses. If the market moves slightly against you, you may lose even more money. Therefore, when choosing leverage, be sure to consider carefully and do not choose too high a multiple. After all, most people say, 'Those who play contracts well end up with two houses' is not just talk.
What do full position and single position mean? Will it affect my returns?
In the Binance trading interface, you will see two options: full position and single position (also called isolated position).
Full Position Mode: As the name suggests, it counts all the money in your account. If you lose, everyone shares the burden. If you open several positions and one position loses heavily, the platform will automatically pull money from other parts of your account to support you until all your money is lost. In this mode, the risk is shared.
Full position is suitable for those who are bold and meticulous; they believe they can withstand momentary fluctuations using their entire account. However, if there isn't much money in the account, the liquidation risk is very high.
Single Position Mode (Isolated Position Mode): On the contrary, isolated position acts like a small 'independent vault.' You can allocate fixed margin for each position; if you lose, you will only lose that part and will not drag down the entire account. This mode is more suitable for conservative players, so even if one position is liquidated, other positions remain safe.
For example: you have 1000 USDT; in full position mode, if one position incurs a loss, the platform will automatically use this 1000 USDT to support you; while in isolated position mode, you can allocate 500 USDT to each position, and if one position loses all its funds, it will not affect the money of another position.
Take Profit/Stop Loss? How do I set it to avoid 'dying' too embarrassingly?
Take profit and stop loss, as the name suggests, help you set expectations for profits or losses in advance, allowing the trading platform to automatically close your position when these prices are reached. This is to prevent the market from suddenly changing and causing you to lose everything before you can react.
Take Profit: When the price reaches the high you set, the system will automatically sell for you to lock in profits.
Stop Loss: When the price falls to the bottom line you set, the system will help you stop loss in a timely manner, avoiding further losses.
But the settings for take profit and stop loss do not only look at the latest price; you also need to consider the 'marked price'.
What is the difference between the marked price and the latest price?
Latest Price: This is easy to understand; it is the most recent transaction price in the market, constantly changing every second. If you pay more attention to the real-time fluctuations in the market, you can usually use the latest price to set take profit/stop loss. In this case, as long as the latest transaction price reaches the point you set, the system will help you close your position automatically.
Marked Price: The marked price is a bit more complex; it is a smoother and more stable reference price calculated by the platform based on market prices, funding rates, and other factors. Its purpose is to prevent your position from being unnecessarily liquidated due to sudden, sharp price fluctuations.
You can think of the marked price as the platform's 'psychological price', which is generally more stable than the latest price. If you don’t want to be 'mis-killed' by short-term market fluctuations, you can refer to the marked price to set take profit and stop loss.
For example: you set a stop loss order and want to sell when Bitcoin falls to 63200 USDT. If you set it using the latest price, when the latest price reaches 63200 USDT, the system will immediately sell for you. However, if the market suddenly experiences a large fluctuation, you may be liquidated even earlier than this price. If you set the stop loss using the marked price, it can be more stable during large fluctuations, avoiding being washed out by some 'false dips'.
Opening a position, closing a position, going long, going short, confused?
These are all terms used in trading. It really is simple, let's break it down:
Opening a position: Opening a position means establishing a new position, deciding to buy or sell.
Going Long: You expect the price to rise, so you buy the asset (like Bitcoin) and wait to sell when it goes up; this is going long.
Going Short: You expect the price to fall, so you borrow the asset and sell it, waiting to buy it back at a lower price to repay; this is going short.
Closing a position: Simply put, it means ending the position you have opened; closing long means selling what you bought, while closing short means buying back what you borrowed and sold.
Funding rate/countdown, what does it mean?
The funding rate is a unique mechanism of perpetual contracts, where longs and shorts pay each other a fee every 8 hours. If the rate is positive, it means that longs pay shorts; if the rate is negative, it means that shorts pay longs. This is actually a way for the platform to regulate market supply and demand, preventing a one-sided market.
The countdown refers to the time until the next funding rate settlement. When the countdown ends, if you hold a position, you will either pay a fee or receive a fee, depending on whether you are long or short.
After listening to me talk so much, you might have gained some new understanding of contract trading. Although it looks tempting, the risks are equally huge. Leverage gives you the opportunity to earn big with a small investment, but it can also lead to losses that leave you with nothing.
Therefore, trading cautiously and做好风险控制 (doing a good job of risk control) is the way to go.
1000x contracts seem risky at first glance, but in fact, they are the most profitable and have the highest win rate among my investment types. At first, I was quite confused about this, but then I gradually understood, mainly due to my unintentional adherence to a clear set of trading rules:
Total Position Setting: The funds I use for contract trading are always fixed, for example, the funds in one account are always 300 USDT. This means my maximum loss is 300 USDT, and once the market trend is favorable, I have the opportunity to earn tens of thousands of USDT in profit. This setting allows me to keep risks controllable while seizing profit opportunities brought by large market movements.
Initial Amount: My initial trading amount is always very low, based on the philosophy of stock market master Livermore. He believed that if you are correct at the start, it is best to start making money. Therefore, the amount I tentatively invest is always small; even if the total position is 300 USDT, the initial amount is often just a single-digit or two-digit USDT, ensuring that I am in a profitable position from the beginning of the trade.
Position Increasing Strategy: I only increase my position when there is profit and the trend is clear. This strategy allows me to further amplify profits when the market is favorable while avoiding increasing risks in an unfavorable market environment.
Stop Loss Setting: I will timely adjust the stop loss position based on market conditions to ensure I do not lose my principal. This is an important principle I adhere to in trading, helping me remain calm during market fluctuations and avoid emotional trading decisions.
These four rules have invisibly enforced strict trading discipline on me, and the logic behind them is also applicable to regular low-leverage contracts because the principles are the same. Of course, before starting, I still want to remind novice players:
Contract trading is not a game, especially for those who think there are some contract techniques or masters who can predict prices. Do not blindly believe that just by listening to them, you can make a lot of money; this idea should never exist. I certainly don't have any secrets that will make you rich at first glance. Moreover, contract trading is very demanding on human nature; unless you can stick to using very little money, like 100 USDT or 300 USDT, this is in line with the strategy of 'small bets for big rewards', not 'big bets for small rewards'. What I share are methods that I hope can serve as a reference for contract players, that's all.
As for the main techniques:
First, transfer USDT to the contract account of the exchange, but the total amount should not exceed 300 USDT. This amount is based on the proportion of my personal spot trading funds. Generally speaking, everyone can determine the trading amount based on 1% of the total funds, but do not exceed 300 USDT for each trade (this limit only applies to 1000x contracts).
Additionally, I actually do not recommend trading methods like 100x contracts due to their high risk and low cost-effectiveness. Either choose low-leverage contracts below 5x and hold large positions, or choose high-leverage contracts of 500-1000x and trade with extremely small positions. It is best to only select the latter method because contract trading is inevitably prone to liquidation, even low-leverage contracts are no exception. 1000x contracts will either liquidate 300 USDT or yield large profits; overall, the risk-reward ratio is extremely high.
Therefore, if you master the correct methods, the probability of making money with contracts is high. However, if there is an exchange without the ADL liquidation mechanism, you will likely lose everything. Previously, my friends and I wiped out the 1000x contracts on Exchange A to the point of being directly downed...
I want to emphasize: the essence of contract trading is to use small amounts to bet for big rewards, not to use large amounts to bet for small rewards.
Furthermore, due to the extremely high multiples of 1000x contracts, transaction fees and funding rates have become relatively secondary; whether you can open the right position is the most important. Moreover, the transaction fees for 1000x contracts are much cheaper than other contracts at the same ratio. From another perspective, contract trading is essentially borrowing money to open a position, and this borrowed money only needs to be repaid as interest. If you are liquidated, you do not need to repay the money; this is actually a very good investment target.
Of course, if you do not trade according to my rules, your losses will also accumulate very quickly.
Second, initial techniques
Assuming BTC is now 16500 USDT and has been oscillating for a long time, I still see a bearish trend and expect a big movement. I recommend starting with 4 USDT, 500X. Note, this is 2 USDT from the 300 USDT.
After opening, just ignore the ups and downs, unless you get liquidated; just keep calm — it’s like you chose a direction before opening, and it’s best to have more than 70% confidence in the short term, and it’s best if a big movement is expected.
Big movements generally occur after the K-line flattens out, as shown below:
The market after 312
As shown in the picture, in the market after 312, every time there is a fluctuation, once the K-line becomes flat, there will eventually be a big movement upwards or downwards; finding opportunities to intervene at this time will be more helpful. As for how to find opportunities, you can refer to some tutorials, observing the appearance of specific K-line patterns, such as the 2B structure.
Many times, when opening a position, if you feel that the current position is not ideal for various reasons, you can lower the initial position, such as starting with 1 USDT. Conversely, if you are particularly confident in a certain position, you can slightly increase it.
However, you need to calculate it; for 300 USDT, if you open with 10 USDT at 500X, the total position is 5000 USDT, while your principal is 300 USDT, which is equivalent to more than 10 times the risk; I do not recommend this!
Because our key to starting a position is to survive in the fluctuations, do not be greedy!
Third, position-increasing techniques
For example, if the market indeed breaks below 16000 and there is a huge negative signal, and you observe the trading volume, MACD, etc., all indicating a significant opportunity for a big drop, then you should consider increasing your position, and it should be with profits. This is commonly referred to as rolling positions, which is key for small funds to bet big, but at the same time, rolling positions is a technical skill, and most people get liquidated here. Below are the methods:
At this point, as the market drops, my position has already made a profit, and 300 USDT has turned into 400 USDT (for example, I haven't calculated the exact amount), and now I will increase my position.
Before increasing my position, I observe that my profit has reached 100 USDT, so I suggest setting a stop loss after increasing the position; the stop loss means a loss of 100 USDT, leaving a final principal of 300 USDT.
At this point, we are already making money, and the direction is likely correct, so there is no reason to risk the principal.
At this point, you should note that setting a stop loss of 100 USDT actually means your original position had a principal of 300 USDT; now it's a profit of 100 USDT. If you increase the position, you could be stopped out at any time.
Because at this time, you can actually take a step-by-step approach. First, set a stop loss of 100 USDT, do not rush to add more, and wait until the profit expands before gradually adding a little more, bit by bit, to ensure you can withstand fluctuations.
The secret here is not to be greedy; if you are not confident, do not even add more. 500x contracts can be extremely dangerous when it comes to losses.
Another critical timing issue for increasing positions is to do so preferably during a downturn after a small rebound or during an uptrend after a small pullback — at this point, the 2B structure is particularly useful and worth studying.
When increasing positions, it is best to only add two or three times, then watch the market run — the more you add, the more dangerous it becomes during pullbacks.
In the above diagram, this position ultimately made a profit of 25000 USDT, but Exchange A closed my position under the guise of maintenance... otherwise, I would definitely have made it big in the bull market. My principal was 46 USDT; the margin of 7 USDT shown in the chart is because some funding fees were deducted.
The reason Exchange A liquidated many of my and my friends' profitable positions at that time was that they did not have the ADL liquidation mechanism, which means the exchange acted as a counterpart to the players. After I figured out this method, Exchange A easily lost money and had no choice but to play dirty. However, Bkex exchange does not have this problem; like Binance, it has introduced the ADL liquidation mechanism, allowing users to compete with each other without affecting the exchange.
Fourth, other supplements
High-leverage short-term trading is the correct way to play contracts; it is high risk but yields higher returns — note, I must emphasize again that I am not suggesting you play high leverage, especially for beginners; do not even touch it because you do not understand it. I am merely sharing my thoughts and methods.
1. Form your own system
In a trading system, there is no holy grail.
We can see that short-term masters like Lam Williams and CIS have very good long-term practical performance. The former's books have sold a lot, but I have not seen a second Williams because everyone's mindset and system vary slightly, leading to greatly different trading results.
Therefore, if you want to wear the crown, you must bear its weight. Formulating your own trading system, enjoying its benefits, accepting its shortcomings, continuously summarizing market rules, and constantly refining it is the key to success.
2. Understand the risk-reward ratio
In a trading system, the risk-reward ratio is the most important content. The true profit formula is: profit - loss - transaction fee > 0.
In trading, there are three basic modes; the first two are:
One is high risk-reward ratio + low win rate + low frequency. Trend-following, medium to long-term. For example, Ouyang Zhuai Bai opened a long position of over 3000 and held it until he was liquidated by OKEX for nearly half a year; Fatty Bitcoin with a capital of 100,000 made a small goal during the bull market in 2021, which is also trend trading.
The second is low risk-reward ratio + high win rate + high frequency. Short-term master mode; the risk-reward ratio is often 1:1, which is very poor. Only some legendary figures might achieve this, and I feel I am not capable of it. There is also a type of person who seems to be quant trading at high frequency to eat the arbitrage on the exchange fees; this is quite advanced, and generally, they won't teach others. Exchanges will also ban anyone who is discovered; ordinary users do not need to understand this.
The third is an extreme risk-reward ratio + medium win rate + extremely low frequency. The 1000x contracts I refer to can be classified as my own category, called the third type; it is also a unique tool in the cryptocurrency world.
With a 300 USDT opening, my maximum allowable loss is 300 USDT. Following my above opening method, I can open many times, but as long as I hit any one, my risk-reward ratio will be terrifying. For example, the position of 46 USDT, which has reached 25000 USDT. If the website doesn't mess with things, it could even reach 50000 USDT, which is nearly 1000 times. Under such risk-reward conditions, even with a win rate below 10%, it doesn't matter — do you think a win rate below 10% is easy? It is impossible to have only a 10% win rate with your eyes closed.
Big data shows that the win rate for retail investors is around 33%.
From a comprehensive strategic and tactical perspective, both high win rate, low risk-reward ratio systems, and low win rate, high risk-reward ratio systems, as well as my system, can succeed.
Therefore, there is no need to dogmatically believe that only the low win rate, high risk-reward ratio path works, and that the risk-reward ratio must exceed 3:1. Whether it is a 10% win rate or a 90% win rate, both can build a successful trading system.
Since both high win rates and low win rates can succeed, there is no need to be entangled in whether to go long or short, and you can even mix both. The important thing is to find a trading method that suits you under the condition of a good match between strategy and tactics.
That's all for today’s trading experience shared by Liang Ge. Many times, your doubts cause you to miss many opportunities to make money. If you do not dare to boldly try, to touch, to understand, how can you know the pros and cons? You will only know how to proceed with the next step after taking the first step. A warm cup of tea, a piece of advice, I am both a teacher and a talkative friend.
Meeting is a fate, and knowing is a bond. Liang Ge firmly believes that fate will bring you together across thousands of miles, while parting is destiny. The road to investment is long; temporary gains and losses are just the tip of the iceberg. Remember, the wise may overlook something, while the foolish may gain something. Regardless of emotions, time will not stop for you. Pick up the worries in your heart, stand up again, and move forward.#NFT板块领涨 #稳定币监管风暴 $BTC $ETH
