Why are most people in the crypto world not suitable for contract trading?

For most people, contracts are a terrifying beast, while for a small number of people, they are a tool for wealth. If you want to engage in contracts, first understand the content below.
1. Assuming a liquidation probability of 0.1%, the total probability of liquidation after 1000 trades reaches 63%, and the probability after 2000 trades is 87%. The liquidation probability is only a theoretical assumption. In actual operations, since price trends typically follow a normal distribution, the probability of liquidation increases exponentially with the increase in leverage. This means that the probability of liquidation with 10x leverage is much greater than that with 5x leverage.
2. Assuming a transaction fee of 0.1% each time and a win rate of 50%, after 1000 trades, the principal is very likely to be reduced to zero.
3. Suppose you have 10,000 yuan. If you made a profit of 50% the first time and then a loss of 50% the second time, you would have 7,500 yuan remaining. If you incurred a loss of 50% the first time and a profit of 50% the second time, you would also have 7,500 yuan remaining. If you lost 90% in a certain trade, you would need to earn a 900% return to break even.
As for the split warehouse method and the stop-loss line, there is no essential difference between the two; both reduce risk while also lowering returns.
4. In the spot market, 10% of retail investors can make a profit, while in the futures market, 3% of retail investors can make a profit.
There are roughly three types of people who profit from contracts:
1. Use small funds to trade short and earn money based on win rates. Strict discipline is required; once you make money, you should withdraw it.
Second, it's about making money through the profit-loss ratio. Even with a win rate below 50%, if the gains are greater than the losses, then you can make a lot of money.
3. It relies on rolling positions, like Tony turning 50,000 dollars into tens of millions, a female college student making millions by shorting Luna after lunch with Dogecoin at 400 times, and Liangxi turning 1,000 yuan into ten million, all achieved through rolling positions.
If you want to treat trading coins as a second source of income, want to get a share in the crypto world, and are willing to spend time growing and learning, then don't miss this article. Read it carefully, as each point is the essence of the crypto world.
It can be said that whether it's a bull market or a bear market, this 【must-follow trading rule】 can be helpful to you! Later, we will discuss the essential tool for Bitcoin trading—BOLL, which can determine whether it is a bull market or a bear market.
Before every transaction, everyone must first ask themselves three questions:
First, think about the reason why you open an order each time.
Secondly, do you often encounter profitable trades turning into losses?
Third, do you often hold onto positions until liquidation and not know what to do? These three questions are unavoidable for everyone who trades, and crypto friends have encountered them to varying degrees. Everyone has gone through this, especially beginners, who are often very blind. The essence lies in their failure to establish a mature trading mindset and trading system.
What is a trading system? It is a self-methodology for trading, opening positions, closing positions, increasing positions, decreasing positions, taking profits, and setting stop losses, essentially a set of rules of your own. The most direct benefit of having such a system is that all your trades are traceable, greatly reducing the likelihood of making mistakes and the amount of losses. Additionally, there is no need to monitor the market in real-time; when you strictly adhere to the system, you have a clear understanding of your targets and losses in mind, allowing you to remain steady regardless of how the market fluctuates.
So how do you establish your own trading system? The most important thing is to have a good mindset. The crypto world is a market that can be traded 24 hours a day, with ever-changing trends and huge fluctuations. Strong psychological qualities are needed when trading. An individual's operating habits, psychological endurance, strategy execution ability, and ability to overcome greed and fear vary in different indices, determining that each person has a different trading system that suits them.
Based on my long-term summary, an excellent system must contain the following characteristics:
First, the frequency of opening orders should not be too high. There are too many people in the crypto world who are eager to get rich quickly; if they don't open an order in a day, they feel they will miss out on the imaginary big market. In fact, opening an order should be based on the market conditions, not just time. Blindly opening orders when there is no market will only lead to losses. There are plenty of opportunities in the crypto world, but most of them are not within your reach, and no one can catch every single fluctuation. "Waiting" is the key; learn to wait, seize your own opportunities, and reduce the frequency of stop-loss orders, and your profits will naturally show a significant increase.
Second, overcome greed. Greed is the most taboo thing in trading coins, especially in contracts, where the market fluctuates daily. With every rise, there is bound to be a fall. I have seen too many people end up losing their profits or even getting liquidated because of their greed.
Third, strictly set take-profit and stop-loss levels. This is the most important operation in contract trading and a key reason why I personally can achieve the highest return rate of 11570.96%. Before analyzing the market and placing an order, always consider the positions for take-profit and stop-loss, especially the stop-loss level, and calculate whether the risk-reward ratio is worth taking the trade. When you feel it’s appropriate, set these two positions; no matter how the market fluctuates, you will remain steady as a rock. Strictly implement the stop-loss to protect your capital, and take profit in batches to lock in profits.
Fourth, do a good job of position control when opening orders. Why is position control necessary? A simple calculation can help you understand: if you make a profit of 20% on one order and a loss of 20% on another, with an accuracy rate of 50%, after 40 cycles, your assets can be halved. Considering the transaction fees, what remains is even less, and the result is definitely that your assets will reach zero. Therefore, it is essential to manage position control well. Keeping a fixed principal is a good choice, and withdrawing profits is a great habit, because what you withdraw is truly yours; anything left on the exchange is just unrealized profit.
Fifth, practice and review summary. Once you have learned to control your mindset, position, funds, and candlestick operation techniques, the most critical and essential part of building your own system is to practice and review. Practice leads to true knowledge, and reviewing can lead to progress.
Reviewing is essential; you need to review every trade and conduct weekly reviews. Notes and real trades can greatly assist everyone in summarizing and enriching their reasons for opening trades, as well as perfecting their take profit and stop loss levels.
The trading system is not something that can be established overnight; it must be summarized through continuous practical trading. No one is born understanding candlestick charts or contracts; it is all learned through constant exploration and summarization. Everyone has paid their tuition through losses. The important thing is that the tuition should not be paid in vain; one learns from their mistakes. By gaining experience from failed trades, one naturally knows what not to do and what to do in similar market conditions next time.
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