The acceleration gear is useful, but the brakes are even more important.
Last week, a new friend came to me for advice, saying that after two months of trading contracts, his capital has shrunk by seventy percent. I asked him to send his trading records, and it was all high-leverage chasing and killing, like watching a chaotic carnival.
This reminds me of Sister Li, a working mom I met last month. When she private messaged me, her tone was low: 'Sister, after a month of engaging with contracts, the 300U I invested is down to 80U. Am I just not suited for this?'
I took a look at her trading records: all 12 times leverage chasing the popular coins of the time, and when the funding rate was positive, she desperately opened long positions, with stop-loss lines virtually nonexistent.
I told her: 'You are not untalented, you just haven't mastered the rules. Follow my method, and we'll gradually pull back your capital.'
Lesson One: Understand the funding rate - the 'subsidy' signal of the market
I instructed Sister Li to do just one thing in the first week: observe the funding rate, without looking at price fluctuations.
The funding rate is the balancing factor in the perpetual contract market. When it is positive, long positions must pay fees to short positions, indicating that market bullish sentiment is overheated; when it is negative, shorts pay long positions, often suggesting that an upward trend may continue.
Sister Li observed that the funding rate for SOL was negative for two consecutive days, which means that shorts were providing 'subsidies' to longs. I instructed her to cautiously open a long position with 3 times leverage, setting a stop loss at 2% and taking profit at 6%. This trade ultimately yielded an 8% profit, and her account rose from 80 U to 86.4 U.
It was such a simple step that made her see the possibility of making profits without relying on brute force.
Lesson Two: Leverage is a tool, not a gambling device
In the second week, we began to focus on technical signals. ADA retraced to the MA30 moving average on the 4-hour chart, and the RSI turned upward from the oversold zone at 28, with trading volume increasing by 1.8 times. This is an opportunity worth trying.
I let Sister Li enter with 4 times leverage and strictly enforced the 'take half profit at 5%' strategy. This trade ultimately gained 12%, and her capital grew to 96.7 U.
Leverage itself is not guilty; the problem lies with the user. Beginners often think that the higher the leverage, the faster the profits, but they overlook that the risks also amplify simultaneously. For example, under 50 times leverage, a mere 2% adverse price movement can lead to liquidation; while under 5 times leverage, the allowable fluctuation space is 20%.
My current rule for myself is: mainstream coins no more than 5 times leverage, altcoins no more than 3 times. This is not cowardice, but my desire to stay in this market for the long term.
Lesson Three: Position management is your safety cushion
Sister Li's initial habit was to jump in with full positions at the sight of an opportunity, which often led to her mindset collapsing at the first sign of volatility.
I taught her to divide her funds into three parts: 'Assault Team' (30%, for high-certainty opportunities), 'Defense Team' (50%, for steady operations), and 'Strategic Reserve' (20%, to cope with extreme market conditions).
At the same time, we established a hard rule: the position of a single cryptocurrency should not exceed 30% of the capital, and the total position should never be fully invested.
In the following month, Sister Li strictly followed these three rules. Especially once, she encountered volatility right after opening a position, and when her losses reached 2%, she immediately closed the position and turned off the software to spend time with her child. The next day she found that the cryptocurrency continued to drop by 15%, and her discipline saved her from a big loss.
A month later, her account rose from 80 U to 720 U, not only recovering her capital but also making a profit. More importantly, she found a rhythm that allowed her to balance taking care of the child and trading.
My contract survival philosophy
After a year of playing contracts, my biggest realization is: this market is never about who earns fast, but who survives the longest.
The funding rate is like a road sign, indicating the real comparison of bullish and bearish forces. Ignoring it is like driving blindfolded.
Leverage is a speed regulator, not an accelerator. 3-5 times leverage is a safety zone for beginners, while 10 times and above is the realm of professional players. When you see leverage as a survival tool rather than a shortcut to big profits, you have truly entered the door.
Position management is your safety cushion. I have seen too many experts who can profit not because they are right every time, but because they lose less when they are wrong.
Sister Li's story is not an exception. It confirms a simple truth: in the contract market, stability beats brilliance, and survival outweighs revelry. Those traders who can survive are often not the smartest, but the most disciplined.
If you feel confused in contract trading, you might start with these three basic rules: understand the funding rate, use leverage rationally, and strictly manage your positions. There are always opportunities in the market, but the premise is that you must ensure you are always present.
Sometimes slowing down can actually be faster. Follow A Ke to learn more first-hand news and cryptocurrency knowledge, becoming your navigation in the crypto world, as learning is your greatest wealth!
