A simpler explanation of rolling positions is: the bold thrive, while the timid perish.
The rolling position strategy: In 2018, I know of one wave of market movement where two people became wealthy through this strategy~ It was truly just one wave of market movement that made them rich, but more often, people lost everything.
When it comes to rolling positions, many futures traders like to talk casually without analyzing the market, whether to roll or not, just based on their mood... The two better rolling opportunities in 2018 were in April with EOS and the subsequent BCH surge.
If the rolling position fails once, it's game over. No matter how much you've earned before, just one failure means it's over. The key is that rolling positions will repeatedly put you in an unfavorable position.
The difficulty lies in judging the big market trends. Enough talk, let me elaborate on the use and judgment of the rolling position strategy.
The literal meaning of rolling positions is to keep rolling your positions. For example, when EOS is at $2, we predict a big market is coming, and we believe EOS will reach 1000 RMB!!!!
So I choose to go long on EOS at $2, using 100 EOS with 20x leverage. When EOS reaches $2.1, I already have 200 EOS, and at that point, I choose to close the position. Then I use the 200 EOS to go long at $2.1. When EOS reaches approximately $2.205, I have 400 EOS... I keep rolling like this. No joke, if EOS doesn't reach 1000 and hits 150 instead, how much money do you think I would have? Terrifying, right? This is with just an initial capital of 100 EOS.
In ordinary futures, when EOS reaches $2.205, your EOS is about 300. That has already opened a gap of 100 EOS, and we have only rolled the position once. Now you know how high the compound returns can be.
Of course, this comes with enormous risks!! If we keep rolling from 100 EOS at $2, and it reaches 150 RMB each!!! While we are fantasizing about a beautiful future, we hold countless EOS and decide once again to go long at 150 since EOS is expected to reach 1000 each in 2018. Suddenly: the milk stops flowing~ the star aura fades away~ it plummets... In a bull market, if your mind is filled with fantasies and you’re not careful... game over. All success can be lost in an instant.
For ordinary futures: at this time, even if it falls back from $2, when it drops to 150, there is still significant room and time to take profits!!! And it's not negligible, just less than rolling positions!
That's how rolling positions work; one mistake can lead to irreversible losses. Of course, you might say, what if I correctly judge the market? Such markets only appear in extreme situations, meaning a bull market or a significant rise of a single coin. Don't give me excuses; if it keeps falling, what about shorting and rolling? Let me reiterate my point: if it keeps falling, for me, it's neither a bear market nor a bull market! It's just a bull market that doesn't belong to the retail investors.
The single coin rises! I personally witnessed a retail investor make a fortune with BCH... He really knew nothing; he just asked me about rolling position operations. Regardless, he opened at more than negative 40% and didn’t care or look... In the end, he rolled from 50,000 RMB to nearly 3 million in just a week... It was that time when BCH took off.
Do you think he is good at market judgment? No, he knows nothing, doesn’t even look at the candlesticks, just mindlessly rolls positions... Once he sees the money increase and it's time to settle, he withdraws the money for consumption and only then closes the position. Do you think someone can always correctly judge the market? Is there any chance of making a mistake? I don't believe so... Errors will inevitably occur.
So, friendly advice: if you judge the market to be good, use rolling positions sparingly, maybe 2 or 3 times, and take profits when you can. If commodity futures are akin to the spot market for cryptocurrencies, the risks are quite similar. Hence, the risks of cryptocurrency futures exceed those of spot markets! The risks of rolling futures are much greater than those of cryptocurrency futures.
"Teaching a man to fish is better than giving him a fish." This is something Lulu wrote during her break. Cherish the moment, and there are more valuable insights that require everyone's support. You can follow (Crypto Xiaoxun) for daily market analyses!
