First of all, what is a contract? Can a contract be played? Then you have to ask yourself whether you want to understand it? Learn it? Investment guru Soros said that investment itself has no risk, only uncontrolled investment has risk, and controlling risk is the soul of all investment. In the eyes of many people, contracts are synonymous with risk, and they think that if they can't make money with spot trading, they can't make money with contracts. This is actually a misunderstanding of contracts. People think that the reason why contracts are risky is because of leverage, but this sentence itself is a false proposition. Leverage is just a tool, it will not cause risk, and the risk is caused by greed in people's hearts.

If you don't know what leverage is, let me give you a simple analogy. For example, if you buy a house for 1 million yuan, but you only pay 10,000 yuan as a down payment, are you using 10,000 yuan to leverage 1 million yuan of assets? If your house increases from 1 million yuan to 2 million yuan in three years, but your cost is only 10,000 yuan, are you making 100 times the money in three years? Is there any more powerful business in the world? No, a 1:100 return, don't you think it's tempting? You give him a little love, and he gives you the whole world.

So contract leverage comes from this. If it weren’t for the addition of financial leverage, 99% of people would not be able to buy a house in full. If you only rely on working, when will you be able to afford a house? In fact, each of us deals with financial leverage every day, but you don’t study it in depth and don’t feel it.

I believe many people should know Archimedes' Principle when they were in school. Archimedes said, "Give me a fulcrum, and I can pry up the earth." This is the effect of a lever. If there is no lever, how can you pry up the earth?

In my eyes, the biggest advantage of contracts is opportunities. Contracts can be long or short, and two-way trading brings twice the opportunities of spot trading. As for spot trading, once the market enters a bear market, there is no way to find a way to make a profit. Correctly understanding contracts, correctly using leverage and two-way trading, is our first step towards correct trading. Of course, learning to play contracts is not something that can be learned in one day. The key is that you have to take the first step to get in touch with it, learn it, and then apply it. Maybe you will fall in love with contracts from then on. After all, the place where you can make 10 yuan or even 100 yuan with one yuan is in the contract. Maybe you are worried now, but the worry is unnecessary. After all, no one is a genius who can do it at birth. Isn't it enough to learn it? As long as you are not a donkey, there is nothing you can't learn.

Now that the cryptocurrency market has become more stable, it is difficult for coins to skyrocket by dozens or hundreds of times. If you want to make money in the cryptocurrency market, you can only do so by playing with contracts. Although it is high-risk, risk is controllable. A contract is just a tool and it is people who use it. The key lies in people. Only those who have studied and practiced the contract have the right to speak on whether the contract is good or not, instead of listening to the nonsense of outsiders and losing the ability to think independently and becoming followers who say what others say.

Create your own trading system:

What target do you like to invest in (what currency)

Conservative or radical?

Is it suitable for short-term or long-term trading?

What time period should I place orders every day: I don’t place orders if the network is not good, I don’t place orders if I don’t have time to check the market, etc.

The betting amount is within the range that you can calmly accept.

Position management (leverage 100 times)

Many times, we lose money in contracts mostly because of poor skills and wrong positions, but the real reason is the position and mentality. All risks are fundamentally derived from positions. Controlling the risks in transactions through position management is a powerful weapon for investors to avoid losses. Only by paying great attention to the issue of position management can we better grasp the issue of trading opportunities. Position management is actually the management of funds, and the management of funds often includes opening positions, increasing positions, reducing positions, stopping losses, taking profits, and closing positions. Generally speaking, if investors want to obtain long-term and stable profits in the digital currency market, the right or wrong of market analysis only accounts for 30%, while the factors of funds and risk management account for 50%.

Position management needs to be selected according to your own trading system

1. The final decision strategy is to push forward (suitable for short-term orders): the opening margin does not exceed 10% of the total position. After the loss, continue to open a position for 10%. The maximum loss in a day is controlled at 30%.

2. Step-by-step strategy pyramid method (suitable for long-term orders): the first opening position accounts for 2-5% of the total position

After we open a position, the market continues to move in our direction, and we gradually reduce the amount of additional funds.

Assuming the total position is $10,000, we open a long position of Bitcoin and buy $500 at $10,000; when the price reaches $11,000, we think the product will continue to rise, but it has already risen for a while, and the room for further growth may be limited, so the amount of funds for the next purchase is reduced to $300; ​​when it reaches $12,000 and is still rising, we think the product will continue to rise, but the room for growth may be smaller at this time, so we invest another $100. This strategy requires very precise control of the market. The stop loss position of each additional order is different

3. Step-by-step winning strategy: Inverted pyramid method (suitable for long-term orders): the first opening position accounts for 2-5% of the total position

When we make a mistake in opening a position, the market continues to move in the opposite direction of us, and we gradually increase the amount of additional funds. Assuming the total position is 10,000 US dollars, we open a long Bitcoin and buy 500 US dollars at 10,000 US dollars; when the price reaches 9,000 US dollars, the funds for the second purchase increase to 1,000 US dollars; when it reaches 8,000 US dollars, another 15,000 US dollars are invested. This strategy must be combined with the method of reducing positions. When there is a profit after the position is covered, the part of the position must be closed. The stop loss price is the same.

4. Average position method

That is, the amount of funds added each time is the same, also known as the fixed position method. This method is between the previous two methods and is more moderate. The trader's judgment on the subsequent possible profit space and the degree of accurate grasp of the market are between the previous two.

Stop loss (stop loss is the core part of contract trading)

1. Definition of stop loss:

The real definition of stop loss is that the set stop loss price should not be easily broken through. The stop loss area will be protected by the market trend and is an excellent defensive point. When the market price is close to the stop loss area, there is a high probability that the market will reverse. When the market price breaks through the stop loss area, the market will inevitably trigger a large number of stop loss orders. There are higher and lower prices. If you do not have a stop loss price, you will put yourself at risk of going against the trend, which is a taboo in trading.

2. The necessity of stop loss:

Stop loss is an important means of protecting yourself in contract trading, just like the brake device in a car, which can ensure safety by "braking" in case of emergencies. The purpose of stop loss is to preserve strength and avoid unnecessary risks, so as to prevent small mistakes from turning into big mistakes or even annihilation. Stop loss cannot avoid risks, but it can reduce losses and avoid greater unexpected risks.

Unpredictability and volatility are the most fundamental characteristics of the contract market. They are the basis for the existence of the contract market and the cause of risks in contract transactions. This is an unchangeable characteristic. No one can predict what unexpected events will happen in the future. All our technical analysis is only a possibility. Transactions based on this possibility are uncertain. Uncertain behavior must have measures to control the expansion of its risks, and stop loss is naturally generated.

The stop loss behavior of the contract is naturally generated by human beings through the experience of losses and failures in the trading process. It is not deliberately made. It is a protection mechanism and an instinct of investors to protect themselves in order to survive. The uncertainty of the market creates the necessity and importance of stop loss. Successful contract traders may have different trading methods, but stop loss is a common feature that ensures their success, just like healthy people will go to the hospital for treatment once they are sick.

We cannot decide 100% profit in trading, but we can control losses 100%. As long as the losses are reasonable, we will succeed in trading sooner or later.

High leverage means small stop loss, low leverage means large stop loss. We use the former to achieve big profits with small losses.

Trading mentality

Common trading errors

1. Don’t be afraid of losses, but be afraid of missing out: If you accidentally miss out and don’t enter the market, it seems that you have missed a big market, as if you have missed out on hundreds of millions. You will reflect and regret why you can’t integrate knowledge and action? Why didn’t you enter the market? In fact, if you really enter the market, due to the different trading levels of each person, you may only make a little profit and take the money in the pocket, and you may not make the money of the entire market. However, you may make the profit of the entire market when you don’t place an order. The expectation difference will make you regret missing the market, and you may only make a small money in the actual operation. There are market conditions every day. Don’t let the missed market affect your emotions. Once your emotions are affected, it may lead to mistakes later.

2. If you don’t do it, you are right; if you do it, you are wrong: Do you feel like you are being targeted by the main force? When you don’t enter the market, the price goes in the expected direction, but once you enter the market, it goes in the opposite direction? It’s an illusion! If you really continue to trade, you may be right or wrong. However, since you didn’t place an order, you will subjectively ignore the orders that may be wrong, and then you will be worried about the market conditions that you saw right but didn’t make, and you will regret it. Over time, you will always lose money on the orders you made, but you dare not make the right market conditions.

3. If it rises a lot, it will fall. If it falls a lot, it will rise. If you blindly predict the market with your own thinking, if you think you are so good, why do you need technical indicators? Think back to the outcome of predicting orders in the past. Haha

4. After placing an order, you like to ask around to see if the price is going up or down: Everyone has different standards and strategies for placing orders. The answer you get may not necessarily be in line with your order situation. So don’t ask around. Don’t let external factors interfere with your plan.

5. Stud Poker: Trading is about probability, not gambling. Getting rich by winning a prize once. Trading is about earning profits by repeating operations with a higher winning rate than losing rate.

6. Fear of stop loss. After the stop loss occurs, the pressure increases. Even if you see an opportunity, you will hesitate and dare not place an order.

This situation is more likely to occur when the opening funds are too large, and the investor can only succeed and cannot fail, or when the investor has no order opening plan. From another perspective, not daring to place an order is sometimes a good thing, not a bad thing. It is more about missing out on risks, not missing out on profits.

7. Don’t want to stop loss, wait a little longer, change the set stop loss price: Many people are unwilling to stop loss or change the set stop loss, mainly because there are several barriers deep in their hearts that they cannot overcome: luck barrier, humiliation barrier, and indifference barrier.

Luck barrier: Maybe if I wait a little longer, I will be able to get out of the trap, maybe a miracle will happen. This is almost the biggest psychological barrier that hinders stop loss. Many people are unwilling to stop loss, or are hesitant about the issue of stop loss, because of this idea. In fact, at this time we should ask ourselves: If I give you another chance, would I still be willing to open a position at this point? If not, then I should stop loss

Humiliation level: What if the price goes in the direction you want after you stop loss? Most people who are unwilling to stop loss have this kind of psychological problem. From the perspective of behavioral economics, this kind of pain is far greater than the psychological comfort of making money next time. In order to reverse this psychological misunderstanding, we should think about it differently: stop loss is our responsibility for our past mistakes, even if it gives us the price we want tomorrow, but that is another issue, they are two different logics. If we find that we are wrong after stop loss, then at most we will lose a little, but if we do not stop loss, we may end up in a dead end and lose everything.

Don’t care: Sometimes the reason for not stopping loss is simply because the loss is not big enough. Small losses may seem insignificant, but many big losses come from small losses. Many people don’t stop loss because they are small losses at the beginning and they don’t bother to stop loss. Later, when the loss becomes big, they panic and hold on. I have lost so much, what’s the point of stopping loss? To put it bluntly, this is numbness and a broken jar. If you can look back at too many market conditions, you will know how stupid you are. Once a trend ends, the direction will reverse. If you don’t stop loss, you may really have nothing, leading to a liquidation or a big loss.

To summarize the misunderstandings about stop loss: funds are used up by frequent stop loss, stop loss means you don’t know how to buy, if you know how to buy, you don’t need stop loss, stop loss means you don’t have the ability. These misunderstandings cause most people to lose money in trading

8. Dare to lose but not to win

Although many people say they are afraid of losing money, their actions are not like that. When they lose money, they are very calm and cool, and they are used to it. When they make a profit, they make money and get out of the predicament. If not run away now, when? They run faster than anyone else. On the surface, everyone is afraid of losing money, but in essence, they are afraid of winning!

Only by setting a reasonable profit-loss ratio can you make money in the long run. When you have a profit, use a moving stop loss to lock the principal first, and then go for a bigger profit. If a moving stop loss is hit, just treat the order as if it was not made.