Discipline is more important than Mount Tai; mindset determines success or failure
As a veteran who has been in the cryptocurrency space for ten years, I still keep the delivery note of my first contract account. 13866 transactions, from an initial $200 to a highest single-day profit of over $100,000, this path is full of temptations and traps. Today, I want to set aside those extravagant myths of getting rich quickly and talk about the real survival rules of cryptocurrency contract trading.
1. Market Cycle: Everything has its time
"Five Poor Six Absolute Seven Turnaround" is not just a stock saying; it is equally effective in the cryptocurrency world. My seasonal rule is simple: enter at the end of September, withdraw at the end of November; enter before the Spring Festival, exit before April. This is not mysticism, but the law of capital flow. Every year from May to August, I basically stay out of the market to avoid forcing trades in a liquidity-dry market.
Why emphasize cycles so much? Because the large cycle determines the small cycle, and the trend is your best friend. In a bull market, a pullback is a buying point; in a bear market, a rebound is a selling point. Trading against the trend is like reaching out to catch a falling knife; luck may succeed once or twice, but long-term failure is inevitable.
Two, contracts are not a casino, but most people treat them as such
Contracts are essentially risk transfer tools that change the nature of risk. If the price increases by 1%, a ten times leverage account earns 10%; if it decreases by 1%, the principal loses 10%. But this does not mean liquidation is inevitable; the key lies in position management.
I have seen too many people treat contracts as a 'gamble': putting in a couple of hundred U with a direct 50x leverage, hoping to earn 5% but losing 100%. This is not a problem with contracts, but with the mindset of the users. My principle is: no single trade risk should exceed 2% of the total account value. For example, with a $10,000 account, the maximum loss for a single trade is $200, and the position size should be calculated based on that.
Three, the truth about leverage: multiples do not equal risk
True risk = holding time × volatility × position size. A ten times leverage for 5 minutes of short-term trading has lower actual risk compared to one times leverage overnight. This is why I choose 5x leverage as my main trading multiple: invest a quarter of the buying funds, leaving enough margin for buffer.
For example: prepare $200 in capital, only buy $50 to open a 5x contract, which means you still have $150 as margin, and the price must drop 40% to liquidate. This way, you can sleep at night without needing to watch the market every minute.
Leverage has another easily overlooked limitation: position size. Exchanges have maximum position limits for each leverage multiple. On Binance, BTC's 125x leverage can only open a position of up to $400. If you have $50,000, you cannot open a 125x leverage position because the system will not allow it. Those claiming they can freely trade with high leverage are likely frauds.
Four, stop-loss is armor, resisting losses is suicide
The most expensive tuition I have paid came from three times of resisting losses: once losing $3549 on XRP, once losing $1672 on ADA, and another time losing over $6000 on Doge. Each time it was because I felt 'it would bounce back,' and the cost of holding on was calculated in seconds.
In extreme market conditions, high leverage positions without stop-losses are a luxury. Take profit can be flexible, but stop-loss must be resolute. I have three stop-loss strategies:
Fixed point stop-loss: for example, BTC's daily fluctuation is about 1000 points, set the stop-loss at 500-800 points
Technical level stop-loss: set stop-loss 1%-2% below support level
Capital stop-loss: each trade can lose a maximum of 1% of the account
Five, counter-intuitive operations in the emotional market
The cryptocurrency market is particularly driven by emotions. A tweet can trigger a surge or a crash, and the importance of sentiment analysis is no less than that of technical analysis. When the market is in panic, it is often an opportunity to build positions in batches; when everyone is euphoric, it is a signal to gradually withdraw.
The market is like an online market; fundamental analysis is studying the quality of fruits, technical analysis is studying price charts, and sentiment analysis is listening to the crowd's discussions. If suddenly many people shout, 'The fruits at that stall are about to be snatched up!', even if the fruits are average, it will trigger a buying frenzy.
My counter-intuitive mantra is: "Buy on big drops in the morning, sell on big rises in the morning; do not chase in the afternoon on big rises, buy the next day on big drops." The volatility in the cryptocurrency market has time regularities; sharp drops in the morning are often panic selling, while big rises in the afternoon are often traps for over-optimism.
Six, my practical system: simple to the extreme
After ten years of refinement, my trading system has only three core principles:
1. Do not predict turning points, just follow the trend
Wait for the trend to clarify before acting. New highs after high-range consolidation, new lows after low-range consolidation. Do not trade blindly during consolidation periods; wait for price to break through key levels before taking action.
2. Three parts of position, both offensive and defensive
Main position 70%: first batch intervenes after trend confirmation
Secondary position 20%: Add more when the trend accelerates
Safe position 10%: to cope with black swan events
3. Only capture two types of high-certainty opportunities
Main upward wave starts within 1 hour (break through resistance + volume increases by more than 3 times)
Deep V pullback second confirmation (retest of neckline not broken + bottom divergence signal)
Seven, the self-cultivation of contract traders
Record your trades daily, including reasons for profits and losses. This is not for show-off, but to discover your own trading patterns. I have recorded 13866 trades, with an average leverage of only 2.06 times, but 25 trades earned over $1000, and only 5 trades lost over $1000. This data helped me recognize my limits.
Recognize the boundaries of your methods. I excel at high-frequency small position trading, but as the account grows, this method becomes less efficient. At this point, you either upgrade your strategy or accept a reasonable return on investment.
Most importantly, keep an eye on the market, effective strategies will have times when they become effective again. During the sharp drop on May 19, the website lagged, and the candlestick charts were delayed; I subconsciously used my initial high-frequency trading method, making a significant profit on the Ethereum contract. This is not luck, but familiarity and reapplication of previously effective strategies.
Eight, heartfelt advice for beginners
If you have not yet come into contact with contracts, I do not encourage you to enter this market. The risks of the stock market are negligible compared to the cryptocurrency market, and contract trading is a cruel game of ninety losses for one gain.
But if you have decided to participate, please remember:
Use spare money for trading, ideally a portion of funds that you won't mind losing; start with a simulated account to familiarize yourself with the market rhythm; stay calm, avoid FOMO (fear of missing out) and panic selling; continue learning, as the market is always changing, and your strategy needs to evolve continuously.
The cryptocurrency market is not an ATM, but a market for realizing cognition. Here, wealth flows from the impatient to the patient, from the greedy to the fearful, and from the ignorant to the knowledgeable.
According to my trading records, only 5 trades have made over 10% profit, with the highest being 16.25%; no single loss has ever exceeded 10%. This verifies the truth of the cryptocurrency market: surviving long is more important than earning quickly. In this market where 90% of people lose money, resisting emotions and maintaining discipline is the only way for retail investors.
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