I wonder if you often see the phrase "Stay away from contracts and cherish life"?
Everyone who enters the circle hopes to find a coin that can increase 100x or 1,000x, thinking of the saying that one day in the cryptocurrency world is like ten years in the human world. However, this is no longer the case.
If you are an ordinary person without much original capital, and you want to invest in Bitcoin and Ethereum to make a lot of money that can change your destiny, in the past, I would also let you buy BTC ETH and you can make a lot of money in spot trading. But now, if you don’t have much capital, even if BTC rises to $100,000, it will not completely change your life.
Don't get me wrong, some higher-risk options may be more suitable for you. Profits and losses come from the same source. The amount of risk you can bear determines the amount of return you will get.
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Hoarding coins in a bear market and selling them in a bull market can change your life by a hundredfold increase? I can tell you from my own experience that this is a delusion. Nowadays, the number of coins in the cryptocurrency circle is almost more than the number of leeks. Financing projects are coming one after another, and the speed of listing new coins is faster than the growth rate of leeks. Look at the average increase of new coins on Binance and Eurocoin. The market value is inflated after listing, and the valuation is outrageous. Institutions continue to invest in projects and get chips with almost no cost. They keep selling them after listing and let leeks take over for them. The funds they cash out in the cryptocurrency circle are drained by them. With a daily trading volume of tens of billions, a project is valued at 10 billion after listing, and the liquidity of the entire market is less than 1%. It is currently severely anemic. Perhaps this is the nature of the speculative market.
If you say that many people have become financially free by making money from local dogs, that is a very small minority. I don't want to touch local dogs. It is better to study futures contracts carefully. Even if you leave this circle, there are still many trading targets to choose from.
In this market, you need to master a skill. There are many things that can be done in this industry. Unless you have experts around you, it is difficult for you to keep up with the pace of the industry. If you want to improve your knowledge, the fastest and most effective way is to consult experienced people or read books. You must remember to master one thing, don't try to grasp everything, otherwise you may not be able to do anything. Of course, please put away your prejudice and laziness, invest your energy, collect information, and conduct in-depth research. This is far more important than money.
First of all, we must understand the situation and ourselves. The purpose of coming to this circle is to change our lives. Please build a complete plan for yourself. When to buy? When to sell? What to buy? What is the strategy? How to do risk control?
I have been communicating with friends in the group, and I have repeatedly emphasized that most people can only make money by following the trend. In many industries, you can be the best as long as you persist and work hard, but losing money in the investment market is the norm. People who are smarter and more diligent than you still lose money. Why do you think you will definitely make money? Investment is to make money with money. If the capital is too small, it is easy to breed gambling. Gambling is not terrible. We should gamble with principles. If we gamble, we should gamble with the highest profit-loss ratio.
What is a trend? It means that the bull market lasts for one to two years. You should make plans during the transition from bull to bear market, follow objective laws and data, and go long on the currency standard to accumulate your original assets.
Pay more attention to new projects. People now like new things and new stories. New coins that have just been listed on Binance in the bear market can be circled. Don't buy them right after they are listed. Spend some time and energy to analyze and study them from multiple angles. If the research is good, it is correct to buy them in batches at this time.
The cryptocurrency industry is developing very fast now, and we need to learn more in this environment. Risks and benefits coexist. The market has already passed the wild growth stage, and potential profits are declining rapidly. If you want to get rich quickly and don’t want to pay too much attention to these, then the only thing left is contracts, which even have more possibilities than altcoins.
I used to be like most people who came in. Many seniors told me to stay away from contracts and cherish my life, but I always think that the cryptocurrency contract market is a very great product. The cryptocurrency market itself is a game of game, a game of human nature, a zero-sum game. Since it is a game, we must first understand the rules of the game. The maturity of people's investment logic is to constantly recognize the rules of the game in this market.
The current cryptocurrency world is more speculative. Don't look at things with prejudice, and don't think that you are right and that others are idiots. Be more open-minded and think about problems from multiple perspectives. Everyone has his or her own way. Buffett can make money through value investing, and Soros can also make money through speculation. No one is necessarily right. The best result is the one that suits you. Please don't be lazy anymore. Spend time and energy to strengthen your trading system so that you won't lose the opportunity to change your destiny again in the future.
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Of course, first of all, you need to build a long-term plan, understand the spot market's band thoroughly, and then start your contract trading journey. I think contracts are very good investment tools. Not only can you make money when the market rises, you can also make money when it falls, and you can also use it to hedge spot. If you lose money in contracts, it is your fault. It is a problem with your trading system and trading plan. This is not the fault of the contract itself. The existence of the contract itself is like a tool. What's wrong with the tool? It is the person who uses it who makes the mistake. Why should the contract, a tool, be blamed for this mistake? You lose money because you have not established a trading system, have no discipline, have a bad mentality, and do not have a stop loss.
Let's understand the advantages and risks of contracts. Can we really fight against human nature and avoid liquidation? I think the cryptocurrency market is now a speculative market. No matter how much the price of the big pie rises, there will be a ceiling. Will it still be an opportunity for ordinary people to buy spot at that time? Some people have little capital. Do you think there is any way to accumulate capital faster in the current market?
Spot goods
Suppose, you only have $1,000 today, and Bitcoin is currently at $30,000. You think Bitcoin is about to rise. If you buy it with $1,000 and it rises to $36,000, you will make $200. Because you only have $1,000, you only make $200 if the price B doubles.
contract
Assuming you also believe that the pie will rise by +20%*5, you will make a profit of $1,000 on your $1,000.
Before you start trading contracts, you must learn how to manage your positions and build your own trading system.
The price of the currency has been rising for a while. If you think the price will fall back in the future, you can go short. Then your profit will be the same as above. If it is spot, you can only buy and go up.
What are the advantages of contracts?
1: Small investment for big gain Theoretically, in the field of contracts, as long as you open a high multiple, you can expand small funds countless times. Contracts improve the utilization rate of funds.
In fact, veteran traders will use a small portion of their positions to trade futures in addition to spot trading, but you should not use a particularly high leverage unless your trading system is very mature.
2: Profits faster
If you only trade spot, with an average increase of 10% each time, it will take 7 times to double the principal of 10,000. But if you open a 10x contract, you can double the principal by catching a single increase.
Profit = 10000*10*10%=10000
Therefore, if you identify the right direction and use reasonable leverage to magnify the increase, your assets will suddenly increase dramatically.
3: Hedge against downside risks
Cryptocurrency contract trading can not only go long, but also go short
You hold Bitcoin for the long term and do not want to clear out your assets no matter what, but the bear market continues to fall. We can increase our currency base through contract trading and make money by short selling. Many big guys will short sell to hedge. Simply put, when the market falls, the chips in your hand will shrink, but by short selling we can reduce the chips from the perspective of the gold standard and increase the currency base, and even make money. When you think that the currency price has ended the bear market decline and is about to rise, we can close our positions and hold the spot and wait for the rise.
4: You can do both long and short, convenient and flexible
When the cryptocurrency market is bullish, it seems that everything you buy will go up, but once you enter a bear market, you will find that even if you buy big cakes, you will lose money. Contracts provide a flexible option. Not only can you go long, but you can also go short. Whether the market goes up or down, you can make money regardless of whether it is a bull market or a bear market.
About Risks
1: Risk of liquidation
There is no sure way to make money in the world, especially to make big money and quick money. Contract trading can magnify profits, and many big guys have succeeded and achieved a counterattack. Although many people have been liquidated, it is a gaming market in itself. Your liquidation does not mean that others cannot. You should work harder on your internal skills. Contracts can make quick money, but they also carry a huge risk of liquidation, which is also the biggest risk.
2: Exchange pin
The so-called pin is the technical K-line, where a very thin line appears up or down. This small line in one minute will not affect the spot, but the short contract is different, because the leverage is increased and the amplitude is also increased. 100 times will explode with just 1%.
3: Magnified human nature
Those who have played with contracts may know clearly what it is. They clearly look at the other party's direction, make a trading plan, discipline, stop loss, stop profit, control position, leverage, etc., but forget everything during the intraday trading. They don't execute the stop loss when they should, and choose to hold the order, resulting in a margin call. It is also easy to get carried away with contracts, constantly magnify desires, and magnify leverage multiples. Many people find it difficult to control their own human nature and cannot abide by the trading disciplines. The result is a vicious cycle of margin calls. In fact, the biggest enemy we have to face in trading is our own human nature.
Finally, let’s summarize the difference between the two
Spot VS Contract
The threshold for spot funds is high, while the threshold for contract funds is low
Spot trading is more suitable for conservative people, while contracts are more suitable for aggressive people.
The spot price has only one direction, and the contract can go up, down, or sideways.
There is no currency standard return to zero for spot trading, but there is a principal return to zero for contracts.
I'm just expressing my opinion on the contract. Please don't criticize me if you don't agree.
The current liquidity is poor, and the main hot money players are all in the band, so it is more suitable to do contracts, and contracts are more suitable for the current market. I am not a contract master, trading for a living is my current state, and respecting market rules is my daily reminder to myself. I just want to tell you a different perspective on the contract tool. I just can turn trading into a business through my own efforts. I hope everyone can build their own trading system, use trading to make money, and harvest their own success.
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