Last week, I blacklisted a so-called 'contract mentor'. Watching him post screenshots of fans heavily leveraged 20 times long in his social circle, the market reversed that night, and the comments were filled with pleas for comfort after liquidation. To be honest, 80% of the people in this industry treat perpetual contracts as a late-night casino, forgetting that the real way to play is to calculate first, then sit at the table; otherwise, no matter how thick your capital is, you are just serving the market.
I have been struggling in this circle for 6 years. At my worst, I was liquidated with 50 times leverage, and only 87 yuan was left in my account. Now, I can achieve stable monthly profits, not because I'm lucky, but because after stepping on all the pits, I have summarized a set of 'stupid but useful' survival rules. Today I’m sharing my invaluable insights with everyone, especially beginners; after reading, you can at least reduce losses by five figures.
First, understand the three mechanisms for survival before talking about making money.
Many people ask after being liquidated, 'Why was I forcibly closed out before the market hit my stop-loss price?' 'Why am I still losing money on my positions?' The essence is that they haven't understood the core rules of perpetual contracts. These three points must be ingrained in your mind:
Funding rate: the 'thermometer' of market sentiment. When the funding rate is positive, it indicates that bullish sentiment is overheated, and bulls have to pay bears; the opposite is true for negative rates, where bears pay bulls. Remember an iron rule: don’t chase long positions when positive rates soar, and don’t short when negative rates bottom out. During that market in November last year, I saw the rate turn positive for three consecutive hours and decisively closed my long positions to short, avoiding the subsequent plunge.
Leverage: the 'lifeline' for beginners. Don’t believe those myths about 'small funds quickly doubling with leverage'; leverage is an amplifier that can magnify profits but also accelerate losses. Now that I am familiar with the operations, I never exceed 10x leverage on individual trades. Beginners are advised to start with 2-3x leverage. Although 50x leverage seems exciting, a mere 3% pullback can kick you out without a chance to recover.
Mark price: the key to preventing 'spike outs'. Many platforms calculate profits and losses based on the transaction price, but the liquidation price of perpetual contracts is calculated based on the mark price. The mark price consolidates prices from multiple exchanges and can effectively prevent malicious spike outs that trigger stop-losses. Therefore, when monitoring the market, focus on the mark price rather than the transaction price, especially during periods of high volatility; this can help you avoid unnecessary losses.
My four-step practical approach increases the winning rate by 40%.
Understanding the rules is not enough; you also need a replicable operational system. My four-step approach has been validated through over 1000 backtests and can help you avoid 80% of ineffective markets:
Step 1: Determine the trend (daily level). Never go against the major trend. I only trade bullish markets where 'EMA30 crosses above EMA60 + MACD red bars expand', and similarly for bearish markets. So-called 'reversal signals' in small cycles are traps; if the direction is wrong, no skill can help. In the second half of last year, during that wave of volatility, I stayed out for two months by sticking to the daily trend, thus avoiding multiple false breakouts.
Step 2: Find the timing (4 hours + 1 hour). Once the trend is determined, wait for a pullback opportunity. A 4-hour candlestick touching the middle band of the Bollinger Bands while RSI rebounds from below 40 is the first signal for a low buy; then wait for a 1-hour level breakout of the descending trendline, with volume increasing by over 30%. This is when the winning rate for opening positions is the highest. I don't even touch contrarian positions now; I've learned enough from the losses of 'catching the bottom halfway up'.
Step 3: Use the right tools (few but precise). It’s not about having many tools, just enough to get by. TradingView is sufficient for drawing EMA and MACD to analyze trends; the fee heatmap must be checked daily to sense market sentiment in advance; liquidation data can help you avoid the 'killing of both longs and shorts' trap; using backtesting tools to verify strategies before opening positions is ten times better than guessing.
Step 4: Control risk (lifeline). This is the most critical step. Set a stop-loss before opening a position. My principle is that a single loss should not exceed 5% of the principal, and if the overall account loss reaches 15%, I must cut positions and take a break. Lock in half the profits when earnings exceed 20%, and use a trailing stop to protect the remaining profits. In the early years, without stop-losses, I returned all my gains; now I strictly enforce discipline and can sleep soundly.
Ultimate advice for beginners: start by practicing on a demo account. If your winning rate exceeds 65% for three consecutive weeks, then consider trading live. This market is not short of opportunities; what it lacks are those who can survive long enough to wait for them.
Finally, I want to say that perpetual contracts are not a casino, but a battlefield that requires precise calculations. Don’t envy others who double their money in a day; those who didn’t calculate risks well might return their gains plus interest tomorrow. In this market, it’s not about being fast; it’s about not being eager to self-destruct.
