If you have $5000 in principal and want to trade contracts, remember to use at most 10%, which is $500, and keep the remaining $4500 for increasing positions.
Next, I will share several ways to make money.
The first type:
Focus on one coin, only trade Bitcoin!
Don't trust those altcoins, and don't be greedy. Coming to the crypto space is to make money, not to lose it. I used to trade many coins at once, and the result was either liquidation or huge losses, or I was constantly stuck.
The second type:
Always set a stop-loss when opening a position; if the market fluctuates greatly, set the stop-loss far; if the fluctuation is small, set it close.
Take profit can be optional, but stop-loss must be mandatory. No one can predict when the market will surge or plunge. If the stop-loss is set well, even in extreme situations, most of the principal can be preserved. Don't avoid setting stop-losses out of fear of losses, or fantasize about immediately breaking even when stuck; this kind of thinking is too naive.
The third type:
Set the liquidation price far, preferably cut in half and then cut again.
The fourth type:
Increasing positions should be planned, don't act blindly.
After opening a position, the remaining principal should at least be able to increase positions four times. For example, the first increase uses $30, the second $60, the third $120, the fourth $240. This way, you can average out the price, and if the market adjusts appropriately, you can easily break even or even make a profit.
The fifth type:
Use the same coin to hedge, only when there are no other options.
If you have done well with the previous steps, then opening a hedge doesn't make much sense. But remember, this method can only increase positions once, so be clear whether you are opening a hedge or adding a fourth position.
The sixth type:
Don't use different coins to open hedges.
Some people like to use several similar currencies to hedge contracts, which is highly undesirable. It's already difficult to understand one coin, adding another will make operations distorted, and in the end, it will just trap each other.
The seventh type:
Open positions based on bull and bear markets, don't go against the trend.
In the early stage of a bull market, don't easily open short positions; in the late stage of a bull market, don't easily open long positions. Don't let intraday fluctuations affect your judgment, resulting in opening at the peak or bottom.
In fact, contracts are not prepared for ordinary players.
1. Capital management must be up to standard. With leverage of 0-100x, short-term losses are inevitable; the risk per trade should generally not exceed 2%-3%, and aggressive players should be at 5%-8%. Exceeding a risk level of 8%-10% may lead to a drawdown of 70% in unfavorable conditions, and the average person's psychological breaking point is around 50%. Strictly enforce capital management. Many people prefer to use 5x or 10x leverage, operating at levels above 4h, where stop-losses generally range from 5%-15%, and the risk per trade reaches 25%. Doing so is akin to seeking death. To ensure risk levels while also ensuring high leverage, the levels must be reduced to 1 hour, 15 minutes, or 5 minutes. The smaller the level, the fewer players can handle it; generally, 1h-4h is the limit for average players, while 5-15 minutes can be managed by professional players, and even 1-minute levels are generally beyond the reach of ordinary professionals.
2. Trading system + must be up to standard. And honing a trading system requires long-term trading experience accumulation. The hallmark of a successful system is not operating outside the model, with clearly defined conditions. In this process, continuous iteration is needed, experiencing the baptism of mainstream altcoins in bull and bear markets. Due to the nature of leveraged trading, T+0, and frequent trading, one must prepare 90% for tuition fees. Many people come in with hundreds of thousands to play, and must understand one thing: no matter how much starting capital, it's only enough to pay tuition once, and there are still 8 more times to go. Therefore, it is necessary to start with small funds; a few hundred or thousand is fine, and don't increase capital just because of profits. Withdraw profits, and continue with small capital. At the beginning, the system and operations won't be particularly refined, and many mistakes and unnecessary actions are unavoidable. Many posts talk about how much they lost; in my view, such losses are meaningless, just paying tuition once, having touched nothing, not having improved the learning curve, and being no different from gambling.
3. Execution ability must be up to standard. Similar to last year's 519 incident, a wrong direction bet can lead to irreversible losses. No matter how much you earned before, if you haven't survived similar black swan events, it all equals zero. Strict stop-losses go without saying, more often than not, liquidations occur from counter-trend bottom-fishing, like the recent Luna+ liquidation is also from counter-trend bottom-fishing. Don't gamble on low-probability events, nor should you hope to accomplish everything in one go.
4. Accumulation of time and experience. A round of bull and bear market fluctuations requires familiarity with the characteristics of various stages of market conditions and adjusting strategies accordingly.
For small retail investors, time spent in this market is limited, and entering such a professional market is certainly difficult. Here are a few suggestions.
1. Small funds for trial and error.
2. Keep leverage below 2/3 times; based on the larger cycle, do a good job of capital planning, and consider rolling positions.
3. Operate on 1h, 4h, or daily level of large cycles.
4. Insufficient conditions, non-professionals should not trade contracts short-term, and should not trade professionally unless they are out of options.
5. Don't invest more than 20k without completing the previous four items; treat the losses as disposable income that you won't feel bad about. In fact, in terms of difficulty, contracts are much more ruthless than arbitrage and spot trading in terms of results. Don't just look at a few people at the top of the pyramid; they are the ones luring retail investors into the market. Who doesn't know that for one general's success, thousands of bones are buried? I hope there are fewer tragedies and more rationality. Light positions, trend-following, and stop-loss. The above suggestions aim to save your wallet, don't fall into the casino trap and take the irreversible path. With 2000 bucks in your pocket, why do contracts? Making ten times a year only earns you 20k; setting up a stall for a month is better than this. Many people end up getting stuck in a rut, insisting on making it work, and the opportunity cost is much higher than other paths. Act according to your capabilities based on the conditions.
