This is an answer that will save you a lot of time browsing forums and researching. If you have not operated Bitcoin contract transactions, then I strongly recommend that you read this article first. After reading this, you will find that you have avoided entering the currency circle. If you have already started operating Bitcoin contracts and have incurred losses and are struggling to find a way, then I still strongly recommend that you read this article word for word. After reading this, you will find that you No more having to be cut off, no more blind bets on the ups and downs, and no need to wake up at six o'clock every morning to receive the message XXX "You have been liquidated by the system" and feel uncomfortable for several days...
It is better to teach a man to fish than to teach a man to fish. Lao Zhong not only tells you the essence of futures contracts, but also shares with you the experience I have gained from years of hard work and paying full tuition in the market, and I have learned my bits. Futures trading systems such as currency contracts can be used as tools! You don’t have to suffer losses that you don’t understand, and you avoid pitfalls. The value of investing in life cannot be overstated. For nothing else, just move your fingers and give me a thumbs up. (If you are short on time, the article is relatively long, so be sure to save it first and read it slowly and repeatedly!)
Let’s look at the table of contents first, without further ado! No nonsense! Go straight to the real stuff! ! ! ! Convenient and intuitive!
1. Basic knowledge of contract leverage
1. Adding leverage brings 100% risk
2. The leverage ratio does not affect the size of the risk
3. You can win unless your judgment is correct.
4. Once you start trading, you will fall into the process of self-deception
2. The role of contract leverage
1. Risk hedging
2. Tools of arbitrage
3. How to play with a high probability of making money, or even achieve it - either make money or not, but not lose money?
1. Used as risk hedging and profit locking
2. Techniques used as high-risk arbitrage
(1) Position management
(2) Point position
(3) Risk control
【Theory】
1. Basic knowledge of contract leverage. Contracts, leverage, and options are collectively referred to as futures. They are a kind of financial derivatives. They were set up by rice merchants who did rice trading in the early days in order to prevent rice prices from fluctuating too much and preventing normal transactions. Contract certificates use a small amount of funds to buy a certificate that can guarantee a certain price transaction in the future. Later, someone saw the price difference between these certificates and came with their own leverage, so they specialized in buying and selling this kind of certificate, so it gradually came into being. the futures market.
Regarding futures trading, believe me, if you understand the following basic knowledge, you will be able to surpass 90% of investors in the market!
1. Adding leverage means there is 100% risk
Compared with spot stocks without leverage, although spot stocks also have the risk of returning to zero, if you invest in a long-term rising value target and hold it for a long time, the risk is basically zero.
Once you add leverage, the risk becomes 100%, because you have a liquidation point (risk of all assets being wiped out) and 100% risk of breakdown.
This is something that most people fail to clearly realize, so they are likely to make the second cognitive error.
2. The risk of 2 times leverage and 100 times leverage is the same
Many people make the mistake of thinking that as long as my leverage is low enough and my margin is high enough, my risk will be low and I won’t be able to liquidate my position! This is extremely ignorant!
This year’s epidemic caused global financial assets to plummet on March 12, which directly refreshed the views of friends who use leverage! Even if you double the amount, you may still be liquidated.
So, please pay attention! ! ! The leverage ratio does not determine the risk. There is 100% risk regardless of the leverage. The leverage ratio determines the distance from your liquidation price.
3. It’s not that you can win if your judgment is correct.
For example, if you buy it right and you are bullish, it does rise after a while.
But sorry~ You may have liquidated your position in advance. For example, you bought too much at about 6,200 US dollars, but before it rose, it fell back to your liquidation price of 5,000 yuan. This means that you have already liquidated your position. It is useless to say anything. .
The subsequent rise, sorry, has nothing to do with you!
3. Once you start trading, you will fall into a process of self-deception for a period of time.
After you place the order, the hallucination begins to occur. You keep expecting it to go in the direction you judged, and then you keep staring at it because it is so close to your liquidation price...
In fact, not only can your subjective consciousness not control the direction of the market, but you can also be easily controlled by price fluctuations, leading to wrong decisions.
Therefore, if you want to participate in Bitcoin contract trading, you must rely on data and strict investment discipline, and through deliberate practice, we can help you get rid of this psychological bias!
After reading the above content, you have actually surpassed 90% of retail traders in this market!
Next, continue to read the following content patiently, and you can surpass 99% of retail traders in this market! Give yourself a thumbs up. In just a few minutes, you have received an excellent investment coach in this market (who claims to be excellent), correcting the cognitive bias you may have fallen into! If you make good use of one of them, it will save you a lot of money.
2. The role of contract leverage
When many people hear about contracts and leverage, they will say that this thing is "gambling", and the operation is as fierce as a tiger and cannot be touched... But few people know that it is actually a good risk hedging tool, followed by a few people Good arbitrage tools to use.
It’s just that most people regard futures trading as a tool for betting big and small at the beginning, so that when we are not good at it, we do not have the intellectual advantage, and we cannot obtain information in the "information asymmetry", we suffer losses. , you will instinctively create some reasons to make yourself feel better, or create an imaginary enemy. This concept is what we often hear: "banker" or "dog bank".
Especially in the blockchain contract market, this is where the battle for existing funds is fiercest.
For example, Bitcoin started to rise from 9,300. After breaking above 12,000 US dollars, it fell by 10% to 15% in an instant, and then rose by 10% to 15% in an instant. If a person happens to be liquidated after chasing a long position, and his position is liquidated again after chasing a short position, it will definitely leave a big shadow in his heart.
At this time, my heart was filled with pain, mixed with regret and self-blame. If you are controlled by this kind of emotion and cannot extricate yourself, you are likely to suffer from depression or even go to the rooftop...
At this time, the only way out for most people is to look for external reasons: "Dog Village" manipulates the market and exchanges to insert pins...
We do not deny the existence of these phenomena. After all, blockchain is still in its own special historical stage.
But these should be included in risk considerations the moment we choose to participate in contract transactions. Rather than "with the benefit of hindsight, you learn from the painful experience." Moreover, if you happen to make money at a certain time, you won't thank the "banker", right?
The most important thing is that when you attribute everything to external factors, the improvement of your investment ability stops. This is the most terrifying thing.
After all, whether in investment, work, or life, after making a mistake, looking for the problem yourself first is the beginning of progress. After understanding this, you need to make a choice. Futures contracts have two functions, one is risk hedging, and the other is a high-risk arbitrage tool. How should you use it? It is like a knife that can be used to "cut vegetables." " can also be used to "kill enemies" on the battlefield. It depends on your own ability to choose the one that suits you best.
Next is the practical chapter, which will give you a detailed explanation of how to use "cutting vegetables" and "killing enemies"! How to choose, you decide!
【Practical Operation】
3. How to play with a high probability of making money, or even achieve it - either make money or not, but not lose money?
First of all, platform selection is very important. To avoid doing evil, you can only choose a large platform as much as possible, with a high cost of doing evil. I personally mainly use the world's top digital currency exchanges, the leading platform Huobi for futures trading, and the options platform London Exchange. As an auxiliary platform for transactions. (No interest related) Next, I will bring the prerequisites and methods of operation into specific situations to discuss.
(1) Risk hedging is also called hedging. Typically used to hedge against spot investments.
For example: On March 12, 2020, the U.S. stock market shut down and the currency circle plummeted. At this time, most investors' inner psychology was probably as follows: Do I want to sell? Wait until it falls a lot and then pick it back up. What if it rebounds after selling? If you don’t sell and continue to fall, what should you do if your income is affected by the epidemic later and you are in urgent need of money? Or if you still have some money in hand, should you increase your position? It has fallen so much.
In a situation like this, you can use a small amount of money to buy some call options, because no margin is required to buy call options. You don't have to worry about being liquidated. If the price continues to rise, you won't be completely short. And if the market continues to fall, then you will just lose a little bit of option premium, but the cash you sold before and then buy the currency after the fall will not only not become less, but may even become more.
This is the case of hedging with options. Many people think options are too troublesome and don’t even understand them. It doesn’t matter. The operation is similar with contracts that everyone is familiar with: Suppose you have 2 Bitcoins and you are really afraid that they will continue to fall tomorrow. I don’t know when the bottom will be.
Now look at it, if you don’t know how to use operational risk hedging, if you sold 2 Bitcoins at that time and regretted not getting on the train, you won’t be able to buy even one back now. Of course, this is looking back, so the thinking is so clear, but when such a situation comes, it is difficult for you to know the direction clearly at a certain moment, so you can use this "tool" to hedge risks, just like an enemy coming to assassinate you. You, you can pick up this shield to protect yourself.
For example, if you sell a Bitcoin for around US$5,000 and open a 2x long order in the contract market without selling it, it is equivalent to still holding 2 Bitcoins. Without taking into account handling fees, the liquidation price is about US$2,500.
At this time, you will find that if it goes up next, you will earn Bitcoin; if it goes down, even if it is extreme, and your position is liquidated, then the Bitcoin you sold before, which is around 5,000 US dollars, you can get from the market Buy back 2 Bitcoins. Here are just examples. There may be many factors that interfere with your specific situation. You need to think and make decisions yourself in the specific situation, otherwise it will be all nonsense.
