Understand the basic concepts of Bitcoin contracts, including long and short positions, leverage, margin and liquidation, and capital rates; 2. Formulate strict risk management strategies, control position size, set stop loss orders, calculate forced flat prices, and distinguish full position and position-by-position mode; 3. Implement fund management and strategy planning, formulate trading plans, build positions and close positions in batches, and reserve reserve funds; 4. Master the basics of technical analysis, learn K-line charts and patterns, support levels and resistance levels, trend lines and channels, and commonly used technical indicators; 5. Pay attention to macro and market sentiment, pay attention to global economic trends, crypto industry news, and market sentiment indicators; 6. Be familiar with various order types, including market orders, limit orders, stop loss orders, trailing stop loss orders, and only make Maker orders; 7. Understand the operating mechanism of capital rates and its impact on profit and loss, and master settlement frequency and arbitrage strategies; 8. Choose a suitable trading platform, comprehensively consider liquidity, handling fees, security, user interface and customer service, and recommend Binance, OKX, Huobi and other platforms; 9. Cultivate strong psychological qualities and discipline, overcome greed and fear, admit mistakes and stop losses in a timely manner, maintain patience and continuous learning; 10. Establish trading logs and review regularly, record transaction details, analyze the reasons for profit and loss, optimize strategies, and accumulate experience through simulated transactions, ultimately helping you move forward steadily in the Bitcoin contract market and improve your profitability.

Bitcoin contract trading is like driving a high-speed sailing boat, which can not only help you ride the wind and waves and quickly reach the other side of wealth, but may also hit the reef due to a slight mistake. This is not just a simple transaction, but also a comprehensive test of market insight, risk management ability and psychological quality. This article will thoroughly analyze the top ten key points you must know when trading Bitcoin contracts. It aims to provide you with a comprehensive guide to help you move forward steadily in the unpredictable contract market, avoid common traps, and master core strategies. From understanding basic concepts to advanced risk management skills, from choosing a trading platform to creating psychological discipline, each item is an important cornerstone on your road to success. Mastering these key points means that you will have stronger adaptability and profit potential, say goodbye to blindly follow the trend, and become a wise and self-disciplined contract trader.

1. Understand the basic concepts of Bitcoin contracts

To enter the Bitcoin contract market, you must first have a clear understanding of its basic operating method. Contract trading is different from spot trading. It allows you to trade through leverage, amplifying potential gains and losses.

• Long and short: Understand that "going long" means buying a contract by predicting a price rise, and "short" means predicting a price fall and selling a contract.
• Leverage: Leverage trading allows you to control a larger value contract with a smaller margin, but remember that leverage is a double-edged sword that can amplify returns and accelerate losses.
• Margin and liquidation: Margin is the funds you use to open and maintain positions. When your losses reach a certain level, resulting in insufficient margin to maintain a position, the exchange will automatically close the position, which is called a liquidation.
• Funding rate: This is a unique mechanism for perpetual contracts, which is used to balance both long and short parties. The funding rate may be positive or negative, and the long or short party needs to pay it to the other party, which settles every few hours.

2. Strict risk management strategies

In contract trading, the importance of risk management far exceeds profitability. A good risk management strategy allows you to survive market volatility and seize the next opportunity.

• Position size control: Never put all your funds into a single transaction. According to your total capital and risk tolerance, the position size of each transaction is reasonably allocated. It is generally recommended that the risk exposure per transaction shall not exceed 1%-3% of the total capital.
• Setting up stop orders: This is the most important tool to protect your funds. When opening a position, determine the maximum loss you are willing to bear and set a stop loss order immediately. Stop loss is not to avoid losses, but to limit losses and prevent small losses from becoming large losses.
• Calculate the forced floor price: Be sure to know your forced floor price before opening a position. This can help you estimate the risk and decide whether you need to increase margin to avoid a breach of position.
• Distinguish between full position and position-by-position model: the risk of the position-by-position model is limited to the margin of the current position, and even if the position is overdue, it will not affect other funds in the account; the full position model will use all available funds in your account as margin, which has a greater risk exposure, but can also bear greater floating losses. Newbie recommend starting with the position-by-store model.

3. Fund Management and Strategic Planning

Successful contract trading is not only about judging right or wrong, but also about a complete set of capital management and the execution of trading strategies.

• Formulate a trading plan: Before each transaction, the entry point, stop loss point, take profit point and position size should be clarified. Adhere to your plans strictly and avoid temporary decisions.
• Build and close positions in batches: Do not try to buy at the lowest point or sell at the highest point. You can consider building positions in batches to reduce average costs and closing positions in batches to lock in part of profits and reduce risks.
• Reserved reserve funds: A portion of unused reserve funds should always be retained in the account to deal with emergencies or seize new trading opportunities.

4. Master the basics of technical analysis

Technical analysis is an important tool for contract traders to judge market trends. Although not the only standard, it provides a valuable reference.

• K-line chart and pattern: Understand the meaning of the K-line chart (opening, closing, highest, lowest price) and common K-line forms, such as hammer lines, shooting stars, swallowing patterns, etc., which often indicate the reversal or continuation of the trend.
• Support vs. Resistance: This is the level where the price may stop falling and rebound (support) and the level where the price may stop rising and fall back (resistance). Identifying these key areas is essential to identifying entry and exit points.
• Trend line and channel: By drawing a trend line between highs or lows, you can determine whether the market is currently in an upward trend, downward trend or consolidation. The channel can provide more accurate trading intervals.
• Commonly used technical indicators: such as MACD, RSI, Bollinger bands, etc. Understand their calculation principles and usage methods, but do not rely too much on a single indicator. It is best to judge based on multiple indicators and price behavior.

5. Pay attention to macro and market sentiment

The Bitcoin contract market does not exist in isolation, and macroeconomic factors and market sentiment have a significant impact on its trend.

• Global economic trends: Focus on global economic data, central bank policies, geopolitical events, etc., which may affect investors' preference for risky assets.
• Crypto Industry News: Changes in regulatory policies, major project progress, entry or exit of well-known institutions, etc. may trigger violent fluctuations in Bitcoin prices.
• Market sentiment indicators: Some emotional indicators (such as fear and greed index) can be used to assist in judging the overall sentiment of the current market, but do not follow blindly.

6. Familiar with various order types

Proficiency in using various order types is the key to improving trading efficiency and precise execution of trading strategies.

• Market price order: Transaction immediately at the best price in the current market. The advantage is that the transaction speed is fast, and the disadvantage is that there may be slippage, especially when the market fluctuates violently. Usually used in emergencies where quick entry or departure is required.
• Limit order: You set an expected price and will be sold only when the market price reaches or is better than your set price. The advantage is that the transaction price can be accurately controlled, while the disadvantage is that the transaction is not guaranteed to be completed immediately. Suitable for planned transactions or pending orders.
• Stop loss order: When the market price reaches the preset stop loss price, the system will close the position at the market price or limit price (depending on the stop loss limit order or stop loss market order).
  • Take the stop loss limit order as an example: Suppose you are long for Bitcoin, the current price is $30,000, you do not want to lose more than $200, and the stop loss is set at $29,800. You want to sell at a price not less than $29,750 after the $29,800 trigger.
  • Operation steps:
    • Enter the contract trading interface and find the "Stop Loss" or "Condition Order" option.
    • Select the Stop Loss Limit order type.
    • Enter 29800 in the "Trigger Price" or "Stop Loss Price" column.
    • Enter 29750 in the "Trust Price" or "Limit Price" column.
    • Enter the amount of Bitcoin you want to close in the Quantity column.
    • Click the "Sell/Float Long" or "Buy/Float Short" button to confirm.

    When the price of Bitcoin falls to $29,800, the system will trigger a limit sell order to sell your Bitcoin at a price of no less than $29,750.

• Tracking Stop Order: It adjusts the stop loss price according to the movement of the favorable direction of the market, thereby protecting profits. When the price reversal reaches the set callback magnitude, the order will be triggered.
• Maker/Post Only: This kind of order will only take effect if it can be put on the order book, rather than immediately trading as Taker. Commonly used to ensure you get a Maker rate (usually lower, even with a rebate).

7. Understand the operation of funding rates

Funding rates are one of the core mechanisms of perpetual contracts, and it is crucial to have a deep understanding of their impact on transactions.

• What is the capital rate: It is a fee paid regularly between long and short sellers in the perpetual contract market, with the aim of making the contract price anchor the spot price.
• How to affect profit and loss: When the capital rate is positive, the long pays to the short; when the capital rate is negative, the short pays to the long. If you hold a position across the capital rate settlement point, this fee will directly affect your net profit and loss.
• Settlement frequency: Fund rates are usually settled every 8 hours or less (depending on the exchange). You need to decide whether to hold a position before the settlement time point.
• Arbitrage strategy: Some traders will use the capital rate to arbitrage, such as when the capital rate is positive and high, they will also buy Bitcoin in the spot market and short in the contract market to earn the capital rate. But this requires more complex strategies and funding.

8. Choose the right trading platform

A reliable, efficient and secure trading platform is the cornerstone of your contract trading journey. When choosing, factors such as liquidity, handling fees, security, user interface and customer service should be considered.

Here are some of the world's leading Bitcoin contract trading platforms:

1. Binance

• The world's leading cryptocurrency exchange.
• Provide a variety of contract products with extremely high liquidity.
• The interface is friendly and suitable for users of different experience levels.
• The security system is perfect to protect user assets.

2. OKX (Ou Yi)

• A well-known crypto asset trading platform.
• The contract trading is in good depth and supports diversified trading strategies.
• There are many innovative products, such as options, delivery, etc.
• Excellent user experience and timely customer service response.

3. Huobi (Huobi)

• An old digital asset trading service provider.
• There are a wide range of contract products and many trading pairs to choose from.
• The transaction system is stable and handles high concurrency.
• Have a large number of loyal users around the world.

9. Strong psychological quality and discipline

Trading Bitcoin contracts is not only a contest of technology and strategies, but also a test of human nature. Emotional fluctuations are the biggest enemy of trading.

• Overcome greed and fear: market rise and fall will trigger greed and fear in human nature. Chasing up at high levels and cutting losses at low levels are common causes of losses. Stick to your trading plan and not be swayed by short-term fluctuations.
• Acknowledge mistakes and stop loss in time: No one can guarantee that every transaction is correct. When a judgment is found, stop the loss decisively to avoid the loss from expanding. Don't hope that the market will rebound.
• Stay patient: Opportunities are not always available, and waiting for the best time to enter is more important than frequent trading. Sometimes, not trading is the best deal.
• Stay Learning: The market is dynamic, stay humble, continue to learn new knowledge and strategies, and adapt to changes in the market.

10. Trading log and review

Recording and reviewing your transactions is an effective way to improve trading skills and discover problems.

• Record trading log: record the entry time, price, quantity, stop loss and profit points, reasons for opening, reasons for closing and trading results of each transaction in detail.
• Regular review: Review your trading log weekly or monthly to analyze the reasons for profits and losses.
  • Which strategies work?
  • What errors occur repeatedly?
  • How did your emotions affect decision making?

  Through review, you can continuously optimize your trading strategies to avoid repeated mistakes.

• Simulation Trading: Before actually investing funds, you can practice on the Simulation Trading, familiarize yourself with the trading process, and test your strategy without taking real risks.

The above is the detailed content of 10 key points you must know about trading Bitcoin contracts. For more information, please follow other related articles on the PHP Chinese website!