How can one establish an invincible position in the cryptocurrency world?
Select Potential Coins: Use half of the principal to buy promising cryptocurrencies and hold firmly for at least six months to a year.
Swing Trading: Use the remaining half of the funds for swing trading, continuously earning profits by buying low and selling high.
How to achieve low buying and high selling? I have summarized a simple and easy-to-learn trading system - 'Simple Immediately Usable Trading System'. This system is easy to understand; a person with normal intellect can learn it in half an hour and become proficient in about a week. It mainly utilizes two tools: turning points and trend lines, making the opening and closing points clear at a glance.
Short Selling Techniques in a Bear Market: In a bear market, adhering to the old idea of buying low and selling high often leads to significant losses. At this time, short selling is a more feasible strategy.
Leveraged Short Selling: You can use leveraged trading for short selling operations, but it is recommended to control the position at 1x. Specific operations can be consulted with customer service.
Low-Leverage Contract Short Selling: Set the contract multiple to 1 and operate with full position when short selling.
The short selling point can also be determined based on the 'Simple Immediately Usable Trading System'.
This trading system not only has a simple operation but also has the following advantages:
Avoid Human Weaknesses: Clear and definite buying and selling points can effectively avoid the influence of greed and fear, ensuring that one buys when they should and sells when they should.
Wide Applicability: Applicable to all cryptocurrencies, including mainstream coins and altcoins.
Flexible Applicable Cycles: Can be used for cycles above 15-minute lines.
Avoid Indicator Dullness: Effectively avoid the misguidance brought about by indicator dullness.
Lastly, one point to emphasize is that during a bull market, one should focus on spot trading and avoid engaging in contracts. This 'Simple Immediately Usable Trading System' may seem simple, but it actually contains the principles of financial trading. I hope everyone does not underestimate it.
The Bottom Line That Must Be Adhered to in Contract Trading
Contract trading is extremely risky. To achieve profits in a high-risk market, the key lies in effective risk management, which means earning more when making profits and losing less when incurring losses. Next, I will elaborate on the importance of risk management in contract trading and some key risk management points.
In contract trading, making a profit once or twice may not be difficult, but achieving long-term stable profits is certainly not easy. The market is unpredictable; we are like a drop in the ocean, and we should not overly pursue win rates, lowest points, or highest points, nor should we fantasize about getting rich in a short time. For every trade, regardless of right or wrong, one should maintain a calm mindset and cut losses in a timely manner. If one earns less in one trade, accumulate a few more; do not be anxious for quick success. Greed and fear are the human weaknesses in the trading market, and to profit, one must work hard to overcome them.
Independent Thinking is Crucial in the Cryptocurrency Circle. The cryptocurrency market is relatively small, and trading counterparts are limited. The essence of making money lies in sticking to one's trading strategy. If one blindly follows the crowd, not only is it difficult to profit, but it may also lead to losses. Therefore, it is essential to strictly adhere to the trading discipline one has set, avoiding greed and luck. One should not be complacent due to a profit from a single discipline violation, nor should they be frustrated for missing opportunities because they followed their discipline.
To effectively manage risk and reduce the occurrence of fatal errors, the following points should be noted:
Reduce Leverage: Control the actual leverage of the position to no more than 2-3 times, preferably around 1 times. If using a full position model, be sure to set stop-loss and take-profit levels to prevent significant fluctuations from causing liquidation.
Learn to Stop Loss: Stop-loss is a crucial part of trading. Many retail investors incur losses not because of stop-losses, but due to liquidation. Market fluctuations are unpredictable; the key to making money is to earn more when right and lose less when wrong. Therefore, when wrong, one must stop-loss promptly, setting a bearable loss ratio, such as 15% or 30%. Once this ratio is reached, regardless of the situation, one must firmly execute the stop-loss.
Reduce Frequency: The more trades made, the higher the likelihood of making mistakes. If a significant loss occurs during wrong trades, the consequences will be even more severe. Therefore, one should reduce trading frequency, grasp high-probability opportunities, and minimize mistakes and losses. This not only benefits profit generation but also helps in adjusting one's mindset.
Capital Management: Capital management is the most important aspect of trading. It can effectively protect the principal, reduce drawdowns, preserve profits, and enhance risk tolerance. Here are a few capital management disciplines:
Retain Empty Position Funds: Never operate with a full position, even if only 10% of the funds are left as empty position. In extreme risk situations, this fund may play an important role. I generally keep 10-20% of funds in empty positions, occasionally used for short-term altcoin trading, with holding times generally not exceeding 24 hours.
Risk Isolation: Contracts and spot trading must be operated separately. The spot portion should not use any leverage, only earning profits from spot price increases. The contract portion can occupy 20-30% of total capital, and in very certain trend markets, it should not exceed 50%. The contract portion should operate with low leverage, anchoring to cryptocurrency-based earnings. If one can achieve stable profits in the contract market, the cryptocurrency-based earnings will be considerable.
Avoid Capital Diversification: Concentrate funds on a few relatively strong cryptocurrencies, avoiding trading too many assets at the same time. Trading too many assets not only does not increase profits but also increases risk. It is best to concentrate efforts on improving the win rate, making it easier to generate profits.
Reflect Often and Summarize: The trading process mainly includes judging bullish or bearish directions, finding entry points, determining the size of opening positions, increasing positions based on market conditions, and setting stop-loss and take-profit levels. After completing each trade, one should carefully reflect, identify their weak areas, and improve. At the same time, summarize successful experiences and lessons from trading; persistent long-term practice will yield rewards.
The above are some of my thoughts on contract trading. Although specific opening techniques and strategies are not covered, I believe these foundational thoughts and concepts are more important; they are the cornerstone of trading. Only by solidifying the foundation and mastering certain technical analysis skills can one achieve stable profits in cryptocurrency contract trading.