It's very simple to double your investment in a bull market, because the cryptocurrency market is easier than the stock market. The stock market has been hovering around 3000 points for the past decade, and ordinary people can only go long. Additionally, information is symmetric, and institutions have a lot of insider information as well as capital advantages. I won't even mention the major shareholders, who can easily arbitrage between the primary and secondary markets. In the cryptocurrency market, at least all information is public; you can find all relevant information about this coin.
You can analyze the market's bullish and bearish sentiment based on this data. Secondly, unlike stocks, the cryptocurrency market does not require you to understand the operating conditions of many listed companies or their industry development cycles. When trading contracts in the cryptocurrency market, you just need to respect the trend; you don't need to consider the fundamentals of this coin if you're not holding spot positions for the long term.
There are a few basic concepts you need to know.
1. What is the essence of contracts?
The biggest difference between contracts and spot trading is leverage. For example, on January 3, 2024, when news suddenly broke that the Bitcoin ETF would not pass, BTC dropped sharply by 10% in an instant, and many altcoins fell by 20%. If you bought Bitcoin with 10X leverage at this moment, you would be liquidated. Later, BTC rose to 45,000 on January 8, and that was no longer relevant to you. If you held spot, it's clear that your loss on that day would be much less than that of your A-shares. Therefore, in contracts, you earn from short-term volatility. Holding contracts long-term may require you to pay high funding rates. The fundamental reason you participate in contracts is that you want to trade short-term and make a big profit quickly.
2. Basic concepts you need to understand before trading contracts.
Isolated margin, full margin, funding rates, long-short ratios, leverage position limits, what multiple of leverage to use in trading, contract open interest, how to calculate fees, etc. If you don’t understand, you can look it up on Baidu; the content is quite basic, so I won’t elaborate here.
3. Pulling back to my own trading system.
I mainly focus on intraday trends, primarily investing based on the 15-minute chart. This practice is similar to the T0 trading habits in stocks and is not too difficult. You can find a suitable leverage for yourself in this trend and engage in high-probability trades multiple times and with high frequency. Over time, the power of compounding will come into play. Sometimes I might have several hundred trades in a day. Therefore, it's essential to find platforms with rebates for transaction fees. You can use my referral code here, as the rebate rate is very high. I remember in December, a wave of ORDI and SOL made my account grow from 400,000 to over 700,000. The volatility of ORDI was significant, earning me a total of 7,000. At that time, I had several hundred total trades daily, with the highest single-day profit being $18,000. My approach is 'small positions, large numbers of trades, and choosing those with high trading volume and bullish market sentiment.' After all, if the volatility is insufficient and each trade does not yield enough profit, excessive trading will result in substantial transaction fees. Then, on the evening of January 3rd, news of significant volatility came out, revealing that Bitcoin spot trading would not pass, causing all altcoins to drop by 20%, and ORDI fell by over 20%. I experienced my first daily loss exceeding 10,000, close to -$12,000. At that time, I summarized the issues I faced, which was not strictly setting stop-loss orders. In the following days, I had my first single trade profit exceeding 10,000 (Ethereum), and later I also capitalized on the second wave of Pepe's surge.
4. Always set a stop-loss immediately after placing a contract order.
Cryptocurrencies can spike up or down due to one or two pieces of news, and there are too many cases of both long and short liquidations. Moreover, trading occurs 24 hours a day, and you could be liquidated while you sleep, so it’s crucial to develop a habit of setting stop-loss orders. Additionally, I generally engage in trend trading. If a trend trade goes wrong, never hold onto the position because sometimes, once a consensus is established, there are numerous examples of prices rising or falling by 100% in one direction; no matter how much money you have, you won't be able to hold through that. Just look at how TRB dropped from 120 to over 700 without any pullbacks over ten trading days in December; if you shorted, even with 0.5 leverage, you would have been liquidated long ago. So don’t wait until you are liquidated to understand the importance of stop-losses.
5. Absolutely do not gamble.
Never harbor any feelings of luck, because you are trading contracts; even if you are right nine times out of ten, as long as you are wrong once and stubbornly hold on to a losing position, you will face a 100% liquidation. A liquidation greatly impacts your confidence and mindset, so I recommend that once a contract incurs a loss of over 30%, you should close the position and take a break to reflect on whether you made a mistake. A 20% fluctuation in the cryptocurrency market over two days is quite normal and happens daily, so if you want to conquer the market in the long term, you must avoid factors that could lead to your failure.
