This is an article I promised to write to a friend several days ago. I delayed it over the past two days, so I’m making up for it today.
Many friends want to know how to reduce their own risks and make stable profits in trading. Here I share a little trick, but this is also a skill that requires patience.
So here we change to a low-risk method. If you use this method to trade and only trade Bitcoin, the risk of being blown up is relatively low. (Forget about Ethereum, the price of Ethereum dropped from 3300 to 2100 directly, without stop loss, and the 2x leverage was blown up)
Here we follow the forward and reverse transactions. First, the forward transaction
1. What is forward trading?
Positive trading means adding to positions with floating profits. This is more suitable for long-term unilateral bullish markets. You enter with a light position, only add positions at key process points, and obtain the maximum return through the operation of the market.
As shown below:
Trading logic: For example, if you have a position of 10,000u, use a leverage of 3x, and then enter a position of 20%. The single position increase is 10% of the remaining position (8,000), and each position increase requires the new position to have a spread greater than or equal to 3% from the entry position. The actual operation is as follows:
Then the entry position of the multi-order is 570, the first retracement support is at 583, and the second retracement support position is 588. The spread between the first support position and the entry position is 2.2%, which does not meet the conditions for adding positions. Then continue to wait, the second position for adding positions is 588, with a spread of 3.1%, which meets the conditions, and add one position here. And continue to hold until the first pin breaks the upper track of kc1 or touches the upper track of kc1 and then stops profit. Here we use the break as the standard for calculation. Without considering the handling fee, the profit of this transaction is as follows:
The final holding cost is about 57514.
Final profit is about: 882
Funds used: 2800
Liquidation price: about 34600
Time: 9 days
It should be noted that after each increase in position, the stop loss position should be moved to 1% down from the increase in position price. That is, after you increase your position at 588, you need to move the stop loss position to 582. The stop loss position should be moved once each time you increase your position.
Then continue to look at this period of decline:
Entry position: 641
Add position: 621
Add position spread: 3.2%
Average holding price: about 62985
Liquidation price: about 87920
Profit: about 640
Time: 2 days
It should be noted that after each increase in position, the stop loss position should be moved 1% upwards from the increase in position price. That is, after you increase your position at 621, you need to move the stop loss position to 627. The stop loss position should be moved once each time you increase your position.
Then let's look at the reverse transaction: as shown below
What is a reverse transaction?
Reverse trading is to increase the position with floating loss. To put it simply, it is an order that is placed in the wrong position, but you do not want to bear the loss, do not want to do reverse T, and do not want to do a lock. Then, during the loss process, you can reduce the loss by adding positions with reasonable and low risks (that is, resist a wave of unilateral market).
However, the reversal does not mean that you can let yourself go and place orders randomly. You still need to follow the basic left-side principle. It can only be said that you have misjudged the trend, or that the bottom or top you thought was not the bottom or the top, so you use this method.
As shown below:
Enter the market at around 585, and use 2000 as the position. Then we can see 5 possible positions for adding positions. Here we do not consider the pin, but only the closing price (the bottom edge of the solid column). They are: 581-572-565-560-535. (This market gives 4 opportunities to exit with profits, but here as an example, we will assume that we will not leave.)
So first exclude 581-572, because the difference between these two points does not exceed 3%
When the price reaches 565, the spread is 3.5%, which meets the conditions for adding a position, so add a position here. Then when the price drops to 535, it meets the conditions for adding a position, so add a position again.
Total funds occupied: 3520
Liquidation price: about 38015
Average holding price: about 57023
Current Price54747
Current spread: 4.1%
It should be noted that you cannot continue to add positions at the current price. The reference for adding positions is the previous low price. If the price of the next retracement is higher than 51895 (spread is less than 3%), do not add positions. Do not add positions before reaching this price. And each time you add positions, you use 10% of your remaining position amount. It is not a mindless increase in positions when it reaches 3%, but it depends on the retracement situation. If you add positions mindlessly, it is easy to increase positions too quickly when encountering an accelerated decline, resulting in amplified risks.
If the price has not reached this level, don't move. Wait patiently. If you are trapped, then you can trap it. Don't make any rash moves.
This method is not suitable for friends with very small positions because it is slow. For small positions, the best way is always to stop loss when you are wrong, rather than dragging it out. This is more suitable for friends with large positions and "loss aversion" (that is, those who don't like to stop loss) and do not have high requirements for expected returns. This is a relatively stable approach (relatively stable, not guaranteed).
All methods have their pros and cons. If you have a better method, you are welcome to share it with everyone in the comment area.
I continued writing calculators.
