1. The most stable way to play the cryptocurrency contract
Choose the right coin and be a good person. As a leveraged trader, volatility can be amplified by leverage multiples. The primary consideration in the trading process is not volatility but certainty.
In an uptrend, go long on the strongest currencies; in a downtrend, go short on the weakest currencies.
For example, at the beginning of a new quarter, eos and eth had the strongest growth. These two currencies were the first choice for long positions when the market fell back, and bitcoin was the first choice for short positions when the market fell. Even if the final result was that the mainstream currencies fell more than bitcoin, only shorting or chasing short bitcoin can avoid the risk of violent pullbacks to a great extent.
Most of the traders in the cryptocurrency circle are short-term traders. When trading, it is difficult for them to have the opportunity to hold on to the ideal point to close the position. At the same time, they are not very proficient in position control, and they cannot rely on shocks to do T to pull the average price. Based on this situation, for most traders, a good opening price is more important than anything else.
Once there is a profit, sell part of it first and lock in the profit, and set a stop loss at the cost price for the rest. This is what I have always emphasized in my own community.
The essence of contract trading strategy
(1) Find out the main trend and enter the market following the main trend, otherwise do not enter the market.
(ii) If you are trading with the trend, the entry point is:
1. A new breaking point of the trend;
2. The sideways trend breaks through in a certain direction;
3. The pullback point of an upward trend or the rebound point of a downward trend.
(3) Positions that go with the trend will bring you huge profits, so don’t get out of the market early;
(IV) If the position building is in line with the general trend and the book profit has proved that you are right, you can use the pyramid technique to increase the position; (reference 2)
(V) Keep your position unchanged until the trend reverses and closes the position.
(6) If the market trend is opposite to the position you opened, stop loss and run.
In addition to adhering to the above strategies, you must also remember three qualities: discipline, discipline, and discipline!
The way of trading is to accumulate little by little, and compound interest is king. If you get out of the cost, you must not turn it back into a loss. If you make a profit, you must pocket part of it to avoid wasting time. In a nutshell: if you make a profit, go boldly, and if you make a loss, the rest will be the original price.
2. Tips for making money with perpetual contracts
1. Avoid full warehouse operation
How should funds be allocated? Fund allocation should be understood from two levels:
First, to understand fund allocation from the perspective of risk, we must first clarify how much loss our account can or is prepared to bear. This is the basis for our thinking about fund allocation. After this total amount is determined, we can then consider how many times we should lose to the market if we lose consecutively in the market, so that we can willingly admit our bad luck and failure.
I personally think that the riskiest method should be divided into three times. In other words, you should give yourself at least three chances. For example, if the total amount of account funds is 200,000, and the client allows you to lose up to 20% or 40,000, then the riskiest loss plan is: 10,000 the first time, 10,000 the second time, and 20,000 the third time. I think this loss plan is reasonable. Because if you do it right once in three times, you can make a profit or continue to survive in the market. Not being kicked out of the market is a success in itself, and there is a chance to win.
2. Grasp the overall market trend
It is much more difficult to follow a trend than to follow a shock, because the trend is to chase highs and sell lows, and one must have the determination to hold positions, while buying high and selling low is in line with human nature.
The more trading conforms to human nature, the less money you make. It is precisely because it is difficult that you can make money.
In an upward trend, you should choose to go long on any violent pullback. Remember the probability I mentioned? So, if you are not on the bus or have gotten off, wait patiently, and if there is a drop of 10-20%, go long boldly.
3. Specify the stop-profit and stop-loss targets
Stop-profit and stop-loss can be said to be the key to whether we can make a profit. In a number of transactions, we must make the total profit greater than the total loss. It is not difficult to achieve this. Just do the following:
① Each stop loss is ≤ 5% of the total funds;
② Each profit>5% of the total funds;
③ Total transaction winning rate ＞50%
If the above requirements are met (profit-loss ratio greater than 1 and win rate greater than 50%), you can achieve profit. Of course, you can also have a high profit-loss ratio and a low win rate, or a low profit-loss ratio and a high win rate. Anyway, as long as the total profit is positive, the total profit = initial principal × (average profit × win rate - average loss × loss rate).
4. Be careful not to trade too frequently
Since BTC perpetual contracts are traded 24 hours a day, many novices trade every day. They wish they could trade every day for the 22 trading days in a month. As the saying goes: If you walk by the river, you will get your shoes wet. If you trade too much, you will always make mistakes. After making mistakes, your mentality will become bad. Once your mentality becomes bad, you may act impulsively and choose "retaliatory" operations: you may go against the trend or hold a large position. This will lead to one wrong step and another, which can easily cause huge losses on the books, and these losses may not be recovered for several years.
3. What are the types of contracts?
Perpetual Contract: Perpetual Contract has no expiration date. Users can hold it indefinitely and close their positions by themselves.
Delivery contract: Delivery contracts have specific delivery dates, including weekly, next-weekly, quarterly, and next-quarter delivery contracts. When the specific delivery date arrives, the system will automatically deliver regardless of profit or loss.
USDT-margined contract: This means that you need to use the stablecoin USDT as a margin asset. As long as there is USDT in your account, you can conduct contract transactions in multiple currencies, and the profit and loss will be settled in USDT.
Currency-based margin contract: The underlying currency is used as the margin asset. The corresponding currency must be held before trading, and the profit and loss are also settled in this currency.
As an investor who has been working in the cryptocurrency world for many years, I am willing to share my experience and insights with you. If you are interested in the cryptocurrency world but don’t know where to start, you may wish to follow my homepage and discuss the mysteries and future possibilities of the cryptocurrency world with me. Click on the avatar to find me.
