In the complex and risky field of contract trading, the choice of entry points is akin to a meticulous game of strategy. Here are some techniques worth noting.
Technical analysis is a commonly used method by many traders. By deeply analyzing historical price trends, trading volumes, and various technical indicators such as moving averages, Relative Strength Index (RSI), and MACD, investors can make certain predictions about future price trends and determine entry points. For example, when moving averages show a bullish pattern, it often suggests that prices may be on the rise, which could be a good time to consider opening a long position.
Fundamental analysis cannot be ignored either. It focuses on studying the economic, political, and social factors that affect futures prices. Investors need to carefully analyze supply and demand dynamics, macroeconomic data, and policy changes to determine the long-term trends of futures varieties, thereby identifying entry points. For instance, certain policies that restrict the mining industry of specific cryptocurrencies will inevitably affect the supply of that cryptocurrency, which will then be reflected in its price. Investors need to be keen to capture this and choose the timing for opening positions accordingly.
Volatility analysis is also of great importance. Studying the volatility of futures prices helps in selecting entry points. Varieties with higher volatility usually mean larger price fluctuations, which is suitable for short-term traders who can profit from significant price changes in a short time; while those with lower volatility are more suitable for long-term investors who seek stable returns over time.
Risk management strategies are a key factor to consider when selecting entry points. Investors should set stop-loss and take-profit points reasonably based on their own risk tolerance and trading goals to control risks. I have seen many traders in contract trading suffer huge losses because they did not set reasonable stop-loss points, leading to significant losses even with slight adverse price fluctuations, sometimes resulting in liquidation. Therefore, when opening positions, one must clearly understand the risk range they can bear and choose entry points cautiously.
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