In the world of contract trading in the cryptocurrency circle, I have seen two extremes of people: one type is the kind who thinks they can 'double their money overnight' with a few thousand USDT, making trades based on feelings and increasing positions on a whim, ultimately losing both their principal and confidence; the other type treats trading like an engineering problem, using a fixed strategy to exploit human weaknesses, allowing them to gradually grow their capital even if it is not much.
I myself transitioned from the former to the latter—after three liquidations, I lost 80,000 in savings, and only after restarting for the fourth time did I realize that the core of profitable contract trading is not 'predicting market movements,' but 'building a replicable strategy system that suits oneself.'
In this long article today, I won’t discuss the metaphysics of "market feeling", nor will I show false "profit screenshots"; I will only break down the logic of strategy building that I exchanged for real money. Whether you are a beginner with 1,000 U or a seasoned trader who has lost a few times and wants to find direction, you can follow step by step to build your own trading system.
First, break the misconceptions: 90% of people lose due to "cognitive biases in strategy".
Before discussing the building method, we must first expose several cognitive traps that repeatedly lead beginners to pitfalls—these misconceptions, if not resolved, will deform even the best strategies in execution.
1. Misconception one: "Copying big shots' strategies will make money".
In my early years, I followed and copied the strategy of a "quantitative god", who claimed a monthly return of 30%. After copying, I lost for two weeks. Later I realized: the core of a strategy is "matching"—the big shot had a principal of 1 million U, able to withstand a 20% drawdown; he watched the market for 8 hours a day, catching short-term fluctuations; while I had 8,000 U, panicking at a 10% loss, and had to work without real-time monitoring.
The truth: There is no "best strategy", only the "most suitable strategy for you". Capital, time, personality, these three elements directly determine the underlying logic of the strategy.
2. Misconception two: "The more indicators, the more accurate the judgment".
When I first started, I piled up the K-line charts like a dashboard: MACD, RSI, KDJ, and Bollinger Bands all opened; whatever indicator gave a signal, I would follow it. The result was often "indicators fighting"—MACD golden cross but RSI overbought, just went long and then it fell, just stopped loss and then it rebounded.
The truth: Indicators are "tools", not "fortune tellers"; multiple indicators resonating may interfere with each other. Experts only use 1-2 core indicators and take them to the extreme.
3. Misconception three: "Not holding positions means you can’t make big money".
My second liquidation was due to "holding a position": shorting Bitcoin, lost 5% thinking "it will bounce back immediately," did not stop loss; lost 20% thinking "wait for a rebound to cut losses," and ended up being liquidated by a big bullish candle. Later I understood: contracts are "leveraged trading," and holding a position essentially bets the principal on market conditions; even if you hold correctly 9 times, one wrong time will wipe you out.
The truth: Stop loss is not "giving up", it is giving the strategy "a chance to survive". Those who can consistently profit have ingrained stop loss into their bones.
Second, the four steps to building a strategy: building a practical system from 0 to 1.
Skip the fancy theories and go directly to practical steps. I have taught this method to over 10 beginners, the fastest one started with 1,000 U and in 3 months reached 8,000 U, the core is "simple, executable, and not reliant on market feeling."
Step one: first "profile" yourself, define the underlying framework of the strategy.
Before building a strategy, answer 3 questions, which will directly determine your strategy type:
1. How much capital do you have? (determines position logic)
Small capital (less than 10,000 U): The core is "preserving capital + compound interest", the position must be fixed at 1/5 to 1/3 of the total, with a stop loss set at 5%-8% (losing a single trade does not affect the mindset), and only use profits to increase positions (do not touch the principal);
Medium capital (100,000 U): Can be divided into 3-4 strategies (for example, 2 trend strategies + 1 short-term strategy), with a single strategy position not exceeding 20%, to avoid single market fluctuations affecting the overall account;
Large capital (more than 100,000 U): The focus is on "controlling drawdowns", using "core position + trial position" model, where the core position occupies 50% for trends, the trial position occupies 10% to seize opportunities, and the remaining 40% is reserved.
2. How much time do you have daily to watch the market? (determines cycle choice)
Office workers (less than 1 hour a day): choose trend strategies with "daily + 4-hour" cycles, just check the market once in the morning, noon, and evening, no need to watch minute fluctuations;
Freelancers (3-5 hours a day): can adopt "1 hour + 30 minutes" cycle swing strategies, capturing intraday fluctuations while avoiding low liquidity periods in the early morning;
Full-time trading (more than 6 hours a day): Consider a "15-minute" short-term strategy, but it must be combined with strict profit and loss limits (short-term fluctuations are fast, and the tolerance is low).
3. Is your personality aggressive or conservative? (determines strategy style)
Impatient and unable to stop watching the market: Don’t do long-term trends, it’s easy to hold on to profitable trades, suitable for "swing strategies" (holding for 1-3 days, take profit when it’s good);
Calm and able to withstand fluctuations: Don’t do short-term, you will be driven crazy by volatility; suitable for "trend strategies" (holding for 5-10 days, capturing major market movements);
Easily panic and regret after a stop loss: Use "fixed percentage stop loss" (for example, if you lose 50 U, just leave), do not use "support level stop loss" (easy to be swept by false breakouts).
Step two: Build the core module: entry, position, stop loss (none can be missing).
The essence of a strategy is "turning vague judgments into clear rules." These three modules are like the three legs of a table; if one is missing, it will collapse. I take "office workers with small capital (5,000 U)" as an example to break down a directly applicable template:
1. Entry module: Only trade "understandable" resonance signals.
Beginners should not use complex indicators, just use the combination of "Bollinger Bands + 5/10 day moving averages" (I have used it for 3 years, with a win rate stable at 55%-60%), only recognize two types of entry signals:
Long signal: Price stabilizes above the upper Bollinger Band, and the 5-day moving average crosses above the 10-day moving average (golden cross), while the volume increases by more than 30% compared to the previous K-line (confirming funds entering);
Short signal: Price breaks below the lower Bollinger Band, and the 5-day moving average crosses below the 10-day moving average (death cross), while volume increases by more than 30% (confirming selling pressure).
Key iron rule: A single indicator does not give a signal; it must be "indicator + volume" resonance to open a position. For example, only stabilizing above the upper band without a golden cross, or a golden cross without volume increase, must remain flat.
2. Position module: Use "fixed position + profit addition" to control risks.
5,000 U principal, opening a fixed amount of 1,000 U each time (1/5 position), leverage of 5 times (beginners should not exceed 10 times). After making a profit, follow the "laddered position increase" rule:
The first trade earns 10% (100 U), use this 100 U profit to increase the position once (the principal remains unchanged at 1,000 U);
Earn another 10% (110 U) and use profits to increase positions, up to 2 times (total position not exceeding 2000 U);
If there is a loss, never add to the position (averaging down is the beginning of holding a losing position), directly execute the stop loss.
3. Take profit and stop loss module: only what is in hand is money, do not hesitate to run when needed.
This is the core "life-saving module", and I give rules for two scenarios:
Stop loss (must be set in advance, hang when opening a position): choose one of two methods.
Fixed percentage stop loss: if a single loss reaches 8% (80 U), exit directly;
Support level stop loss: When going long, if it breaks below the 5-day moving average, when going short, if it breaks above the 5-day moving average, immediately stop loss.
Take profit (don’t be greedy for "selling at the highest point"): staggered take profit.
First target: earn 10% then take profit on 50% of the position (secure profits, reduce risk);
Second target: earn 20% and then take profit on 30% of the position, leaving 20% of the position using "trailing stop loss" (for example, moving the stop loss to the break-even point, letting profits run);
If it does not reach the target and breaks in the opposite direction, clear the position directly (do not wait for a pullback).
Step three: Backtesting + trial trading: Use the "stupid method" to verify the strategy's effectiveness.
Don’t rush to test with real money after setting up the strategy; first do "historical backtesting" and "small position trials" to avoid falling into pitfalls directly.
1. Historical backtesting: Use past market conditions to verify the strategy.
Look at the daily market conditions from the past 3 months (for example, Bitcoin or Ethereum), and manually review according to your strategy rules:
Record the time, position, profit and loss points for each trade that meets the "entry signal";
Statistics on win rate (number of profitable trades / total trades) and profit-loss ratio (total profit / total loss);
Qualification standard: Win rate ≥ 50%, profit-loss ratio ≥ 2:1 (earning more than losing). If not meeting the standard, adjust the entry signal (for example, increase the volume increase ratio to 50%).
2. Small position trial trading: Practice with 10% of the principal.
After passing the backtest, use 10% of the total principal (for example, 500 U) for a trial run for 2-4 weeks, focusing on two things:
Record a "trading journal": write clearly the "entry reason, position, profit and loss points, profit and loss results, and review summary" for each trade (for example, "this loss was because I didn't wait for the volume to increase, next time I must wait for the volume signal");
Observe "execution deviations": for example, you set "stop loss when breaking below the 5-day moving average", but when it actually breaks, you hesitated; this is "execution deviation" and needs targeted adjustments (for example, change to fixed percentage stop loss, which is easier to execute).
Step four: Iterative optimization: make the strategy adaptable to market changes.
Market conditions will not remain unchanged; the effectiveness of strategies in volatile and trending markets is vastly different. The core of optimizing strategy is "focus on the big picture and let go of the small details":
Cut low win rate signals: If trial trading finds that "in a volatile market, the win rate of the Bollinger Band breakout signal is only 30%", add "volatile period" to the "no trading" rule (use RSI to judge volatility: trading around 50 is volatility);
Strengthen high win rate models: If you find that the signal of "golden cross on daily level + volume increases by 50%" has a win rate of 70%, set this signal as the "core entry point" and focus on it;
Do not frequently make big adjustments: Optimization is not "starting from scratch"; only change one module at a time (for example, first adjust the entry signal, then adjust profit and stop loss), run a trial for 2 weeks after adjustments to see the results.
Third, finally: more important than the strategy is "trading discipline".
I have seen too many people set up strategies but fail due to "lax discipline"—when the market fluctuates, they become confused, hesitating when they should stop loss, itching to trade when they should be flat. Finally, here are 3 "iron rules" that work better than any strategy:
If the market is unclear, stay flat: if the K-line is consolidating around the middle Bollinger Band with no golden or death cross, do not open a position (opening in a volatile period = giving away money);
Execute when the rules are triggered, don’t make excuses: when the stop loss signal appears, even if you think "it will rebound immediately", you must exit; when the take profit signal has not been reached, even if you "worry about falling", do not sell early (trusting the strategy is more important than trusting feelings);
Stop trading if the daily loss exceeds 10%: When the mindset collapses, anything done is wrong. Stop and review, then trade again the next day.
Finally, I want to say to everyone: Contract trading has never been about "betting on size", but about "framing risk with strategy and waiting for opportunities with discipline". When I started with 5,000 U, I made a maximum of 300 U a day, but I never lost more than 400 U. Gradually rolled to now, the money in the account wasn't earned by "guessing the market", but accumulated "through strategy and discipline."
If you are still relying on feelings to open positions and repeatedly getting liquidated, it’s better to stop and build your own strategy—turning complex trading into simple "execution rules", you will find that stable profits are actually not that hard.
If anyone needs the "trading journal template" or "backtesting form", feel free to let me know in the comments, I will organize it and send it to everyone. Also welcome to share your trading experiences, let’s avoid pitfalls and grow together~#比特币VS代币化黄金 #ETH走势分析 #美SEC推动加密创新监管 #加密市场观察
