Under high leverage, there are no winners, only survivors.
"Another liquidation night, 1 billion liquidated across the network in 24 hours!" Such news is no longer fresh in the cryptocurrency world. I have seen seasoned investors who entered the market in 2015 lose hundreds of thousands in a single day during the major fluctuations of 2023. I have also seen many newcomers, driven by the dream of 'recovering losses overnight', open high leverage positions, only to see their principal wiped out in minutes.
Why is the cryptocurrency contract market so cruel? Simply put, high leverage + high volatility + human weaknesses combine to create the curse of 'nine out of ten lose'.
But to be honest, I have managed to grow my initial capital of 100,000 to eight figures in just over two years, not through luck, but through a strict risk control method and trading discipline. Every word shared below is hard-earned experience from my own investment.
Why are most people destined to lose?
1. Leverage is a trap, not a pie.
Many beginners jump in with 50x or 100x leverage, thinking it’s a quick way to make money. Little do they know, high leverage means your survival space is extremely narrow.
For example, if the price of Bitcoin is $40,000 and you open a long position with 100x leverage, if the price falls by just 1% ($400), your principal will go to zero. Since Bitcoin typically fluctuates by 5% in a day, this means your position might not last a few hours.
2. Emotions drive trading, not strategy.
'Chasing highs and cutting losses' is human nature. When the market is booming, beginners blindly follow trends; when the market panics and sells off, they rush to cut losses. The result is always buying at the peak and selling at the bottom.
When I entered the market in 2015, I made the same mistake. Later, I understood that the essence of trading is counterintuitive—when others are greedy, I am fearful; when others are fearful, I am greedy.
3. Blindly trusting 'masters' leads to a lack of independent judgment.
Various 'signal teachers' on social media claim they can guarantee you profits. But the truth is, if they were really that good, they would have made a fortune by now without needing to recruit students.
I once followed a 'master', but his every call was almost a reverse indicator. Later, I found that he sent opposite trading suggestions to different groups, and half of the people would think he was 'accurate'.
My survival rules for trading contracts.
1. Keep leverage within 5x.
I never exceed 5x leverage now, even if I am 100% confident. For example, with a 2000 USDT principal, I only buy in 500 USDT and open a 5x contract. This means that if the coin price drops by 40%, I will blow up my position, significantly increasing my chances of survival.
Remember, leverage is not for showing off, but for controlling risk. Low leverage gives you the confidence to hold positions and allows you to benefit from major trends without being shaken out by small fluctuations.
2. Firmly split positions, never go all in.
I divide my capital into three parts, using only one part at a time. For example, if I have 30,000 USDT, I split it into three 10,000 USDT portions. I only use one portion to open a position, while the rest is locked in my wallet, 'pretending it doesn't exist'.
The biggest benefit of splitting positions is avoiding emotional trading. When people lose money, they tend to make 'revenge trades', resulting in even greater losses. After splitting positions, even if I misjudge and blow up one part, I still have two parts left to help me stay calm.
3. Cut losses, let profits run.
Setting stop-losses is the lifeline of contract trading. I set a stop-loss for every trade, usually at 5-10% of my principal, and I exit decisively when it hits that point without holding onto false hopes.
Conversely, for profitable trades, I adopt a trailing stop-loss strategy to allow profits to grow fully. A 30% profit under 5x leverage is equivalent to 150% in spot trading; capturing major trends is the true value of contracts.
4. Only trade mainstream coins, stay away from 'meme coins'.
I only trade mainstream coins like BTC and ETH, and never touch small coin contracts.
Mainstream coins have good liquidity and are not easily manipulated. Small coins (like meme coins) are highly volatile; manipulators can easily cause you to blow up your position. Remember, the risk of the contract itself is already significant; don’t add to it with coin risks.
5. Go with the trend, don’t hold onto losing trades.
The market is always right; it’s our judgment that is wrong. When the market trend contradicts my judgment, I choose to stop loss and exit rather than stubbornly hold on or average down.
Holding onto losing trades is the deadliest mistake in contract trading. I have seen too many people hold through small losses to face huge losses, ultimately blowing up their accounts. Remember, the market doesn’t close; opportunities are always there, and preserving your capital is the most important.
Sincere advice for beginners.
If you haven’t traded contracts yet, my advice is: don’t touch them for now! Focus on spot trading first, understand market rules before considering contracts.
If you have already entered the market, remember the following ironclad rules:
Invest with spare money: never borrow or take loans to trade coins.
Simulate before trading live: major exchanges have simulation features; practice first and then trade.
Continuous learning: learn technical analysis, market dynamics, and blockchain knowledge.
Regularly review: summarize the reasons for success and failure to form your own trading system.
Contract trading is essentially a zero-sum game; if someone makes a profit, someone else incurs a loss. To be that 'one' winner, strict discipline, a good mindset, and continuous learning ability are required.
Remember, in this market, surviving longer is more important than making more money. I hope you can avoid the detours I took and find your own path to wealth in this ocean of opportunities and risks.
Follow Xiang Ge to learn more first-hand information and precise points in the crypto space, becoming your guide in the crypto world; learning is your greatest wealth!#加密市场反弹 #美联储重启降息步伐 $ETH
