The Secret of Making Profit in Contract Trading
When some novices make contract transactions, they eagerly want to have a teacher to guide them. Therefore, they worship different kinds of "teachers" as mentors. But have you found it weird that you still can’t make money being a copycat? Instead, membership fee is wasted for nothing.
In fact, why don’t they trade for profits instead of teaching others if their “skills” are effective?
The magic passwords to profits are just in front of every trader.
Even if you predict the right direction, any variations in position, margin, profit-making and stop-loss, close position time, means the difference between profit and loss,
The teacher you worship will not remind you of every step.
Now, let me tell you the secret of victory in contract transactions:
Tip 1: No one can accurately predict the market trend
No one can accurately predict the market's up and down for every time except God. Even the insider trading can go dead because of unpredictable market. So, no blind trust in others is the first step to be a successful trader.
Tip 2: Transaction winning percentage and profit margin
We can't predict the market, just as we can't predict whether it will be front or back when we flip a coin. But we can predict its likelihood after 100 times coin-flips. If the front is "win" and the back is "lost", then the front number divided by 100 is our winning percentage.
We set a tolerable fixed loss amount as R. As long as we trade each time, if the trend is against us, we will leave the market with maximum loss at R. But in an optimum market, we may earn at least 2 multiply R and leave. Please see the following formula:
1. Winning percentage is 50%
If you operate 100 times, 50 times to make money, 50 times to lose money, and then
Profit amount = 50*2R
Loss amount = 50*R
Total profit = 50*2R-50*R=50R
2. Winning percentage is 40%
Even if our winning percentage is less than 40%, we can make a profit. Like100 operations, 60 losses, 40 earnings, and then
Profit amount = 40*2R
Loss amount = 60*R
Total profit = 40*2R-60*R=20R
Many indicators can help us determine the winning percentage, which we will introduce in future courses. For example: support and resistance levels.
As it shows in the picture above, the support level is at around 7500USDT/BTC. When you bid at this position, the winning percentage must be much higher than at 11,000. But judgement by this standard alone is far from enough. We will teach how to judge in future courses.
Tip 3: Cut the loss and let the profit run.
In extreme markets, price movements deviate from previous expectations, but you should stick to a golden discipline - "cut the loss and let the profit run." Loss for one time is not terrible, but breaking trading disciplines is.
We are the ultimate winners as long as our profits can outrun losses.
Cutting losses requires strict self-disciplines and stop-loss setting. In future courses, we will invite experts to tell us about important technical indicators such as “fixed stop-loss”, “trailing stop”, “callback stop” and “support level”.