I see many bloggers saying they opened 5x or 10x leverage, which is already quite small.
I'm really speechless. In fact, I want to tell you all that you're wrong.
Leverage is not calculated this way at all. The leverage rate calculated by the platform has nothing to do with you; it’s roughly the ratio that affects the platform's safety. You should calculate risk based on stop-loss or full principal.
With such high volatility in crypto, it's sufficient to open positions evenly in stages, investing about 10-20% of your principal each time, with a total position limit of about 2x (short) to 4x (long) of your principal. The overall stop-loss risk at any given moment should ideally be within 20% of the principal (or within your psychological tolerance, which must also be less than 20%). It is recommended to average the risk over time to 10%, meaning there will be periods where you are in cash... Some may ask, why even trade contracts then... Hehe... To say something that might offend the entire crypto community, do you really want to earn coins or earn money? Is there a more flexible speculative tool than contracts? Is a stablecoin truly useless? When a bear market arrives, is it safer to hold coins or stablecoins? When you spend money, are you spending coins or stablecoins?
Dear friends in the crypto world, trading contracts (pure speculation) is completely different from investing in coins (similar to venture capital); they are two entirely different professions.
The essence of contracts is trading risk. In other words, it’s about using risk management and expectations to make money.
When trading contracts, you must clarify this sentence.
You may not believe in technology, the market makers, K-lines or moving averages, BTC, thinking they are all scams. You can also believe in them; these conceptual issues won't hinder your ability to make money.
But there is one thing you must understand, and that is 【risk】. What is risk? How to manage risk? How to calculate risk? How to operate with risk? How to withdraw risk... How to survive...
------- You cannot earn money beyond your cognitive range... Initially, if you invest in a coin and its value doubles, you earn 100%; now if you trade contracts and make 3x, resulting in 300% profit, where does that extra money come from, whose money is it? Do you know?
—For contract trading, the money earned comes from managing risk, which is actually the money given to you by others' losses and liquidations. To obtain this money, first, you must not get liquidated...
In reality, looking at the market from the perspective of 【risk】 is completely different from how ordinary people view the market. It's like looking at a mountain from the base versus viewing it from the top; it’s not the same thing at all. For example, those who buy coins can hold on and wait for the price to rise, enduring losses with patience... But in contract trading, if you hold on waiting and endure losses, you likely won't survive beyond the first three rounds.
Therefore, operations truly based on 【risk】 management are completely different from those based on 【dreams】. In the trading market, dreaming costs money, while those who manage 【risk】 aim to seize that money.
So, do you want to be a 【dreamer】 or a 【risk manager】? It depends on yourself. However, 【dreamers】 should not trade contracts, as trading contracts can shatter dreams built over years within days; that’s waking up too quickly.
Anyone who has made significant money will feel during the process: 'That period was almost like picking up money.' It’s somewhat true, but—when your opportunity arrives, meaning when it's your turn to pick up money, you need to be alive and have the capital to pick up money.
Yes, making money from contracts is not difficult... After all, there are so many people liquidating and giving away money. They are racing on the edge of a cliff; you just need to wait at the bottom of the cliff and pick up a few parts to make a living.
The difficulty lies in the fact that it is inherently against human nature. Essentially, you have to do the opposite of what ordinary people think, like the idea of 'getting rich overnight.' Whenever you are eager to increase your position or open a position, think about what it means to 'act against human nature.'
…If buying coins is fishing, trading contracts is stepping into the boxing ring... Therefore, I say there’s plenty of time for being in cash, which is quite normal. Waiting, testing, retreating, trying again, and waiting again... this is the norm for successful speculators.
In fact, strategies over a period of time are almost always straightforward and can be said to be well-known.
For example, on February 14, 2022, many teams' strategies were to short most coins while timing long positions in BTC for hedging.
The reasons are not many, just think of yourself as a big shot in the crypto world and deduce from there. With such an absolutely profitable strategy, 80% of people who operate contracts won’t make money.
And such a simple strategy actually contains countless details. For example, the simplest operational principles, why not short based on BTC directly, why shorting is much more conservative than going long and has much shorter holding times, how to handle stop-loss when shorting, how to short various technical coins... The stop-loss strategy for contracts needs to have theory behind it, which is worth studying. The value of stop-loss theory is at least half of what you invest in contracts. If you really can’t find it, you have to derive it yourself (that’s what I did; I found someone, but they wouldn’t teach, so I derived a set myself). A complete set of theory implies a complete set of operations; strict execution will always provide opportunities.
Trading is like this; superficially, it appears extremely simple—just buy and sell (one minute on stage), but behind the scenes, countless people have done the groundwork (ten years of practice offstage)... Overall, this is a profession. It’s not to say that beginners can’t do it, but you must study and train seriously before you can truly step into the arena.
I often compare flying a plane to speculating. The reason is that both are quite similar; if you forcefully fly a plane without knowing how, it results in disaster. Similarly, if you forcefully speculate without knowing how, you will inevitably face liquidation.
Risk management and stop-loss management are akin to the most basic skills of flying a plane; with these, you can at least ensure you won't die.
Key point: The bull is still here! The bull is still here!! The bull is still here!!!
The altcoin season is approaching, and Mengke has carefully selected several coins with a hundredfold potential for loyal fans. Please stay tuned and let’s catch the next wealth growth point together! Follow Mengke! Let’s continue to profit and enjoy the gains!!
