Editor's Note: The original title was "Why do you advise you not to make contracts?" 》
Recently, the digital currency market has fluctuated violently. Yesterday, I heard a friend in the group say that he was making a contract and broke his position. Some emotions, so I decided to write an article about the contract.
"Don't touch the contract" is actually the consensus of most people in the entire digital currency market. They even changed a lot of ways to express this meaning, such as: "The contract is the devil", "The contract is a drug, and it can be addictive. ". But no matter what you advise, there are still many newcomers and friends who want to try the contract. In the end, they lose a lot of money on the contract and even go bankrupt. Why does this happen?
- Playing a contract is like gambling. Once you are addicted, you can’t stop.
- Contract exchange seeks compliance: as low as 1,500 knives for high NFA licenses
- Regulatory throat, BitMex distress: Can the "king of leverage" survive the crisis?
In fact, it is not difficult to understand their ideas. Some new friends know that the contract is gambling, but he is here to gamble. He feels that the money is quick and exciting. They treat the contract transaction as an "online Macau casino." There is nothing to say about this, as long as you bear the consequences yourself. In addition, there are many friends who have some misunderstandings about the contract. They think: "If I can see the general direction, then the leverage contract can amplify the profit, why not? ? Even if I sometimes judge the wrong direction, as long as I stop the loss in time, then in the long run, I must lose more and win more. Why do n’t I make a contract in this case? Is n’t that stupid? "
Today's article is aimed at friends who have a second idea, and analyzes the errors of this view for everyone. You can also try to answer the above questions yourself to see if you have any answers.
1. The contract changes the nature of risk, turning your judgment of long-term trends into a gamble of short-term volatility
Let ’s answer the question first: “Why even if you can understand the big trends, you still ca n’t make contracts.”
Everyone has a different definition of megatrends. Some people think that the 4-hour K-line change trend is a megatrend, some people think that a 1-day trend is a megatrend, and some people think that a 1-4 year trend is a megatrend Everyone has a different definition of trends. So, you think that you can understand big trends, not necessarily you can really understand them.
In fact, even if you can understand the general direction and trends, your best way is to hold and store coins, not to make contracts .
Because long-term megatrends need to be coordinated with long-term investment ideas, and spot and hoarding are long-term investment ideas.
The more essential reason behind this is: leverage changes the nature of risk, turning your judgment of long-term trends into gambling on short-term volatility.
When you are not leveraged, as long as your general direction is correct, you just have to wait patiently, time is your friend. However, when you add leverage, the nature of the risk changes. Since you are looking at long-term trends, what you have to bear is long-term and large volatility risk. You can cope with this long-term and large volatility risk when no leverage is added. Long-term fluctuations. Although you are optimistic about the current market situation, in the process of realizing this market, there will be many ups and downs, and there will even be such a 30% 50% one-day drop such a large fluctuation, so no lever can resist this large Volatility, so as long as you add leverage, you actually turn your long-term judgments into short-term volatility gambling,
Second, the devil power of the contract
Let ’s take a look at the second question: with a contract, you can amplify your profit when you win; when you lose, I just need to stop loss in time. Can this be done?
You can't do it!
Not only can't do it, but in practice, your operation must be the opposite: if you make a profit, as long as you see a slight callback in profit, you will definitely want to stop profit immediately; if you lose, you will want to always be hard Carry on, even make up positions.
Maybe during the first few operations, you can still maintain your mind, achieve timely stop loss and long-term increase in profit, even if there is a callback, you can survive it, but there will always be a time when your mind will be confused, your The energy will not endure, and it will return to the old path of taking profits and stopping losses, and as long as there is a mistake in the contract transaction, it will be enough to destroy you.
why? Because there is a devil's power behind the contract!
There is such a saying in behavioral psychology: you earn 100 yuan, and the psychological feelings brought you by losing 100 yuan are different. Generally speaking, the loss of 100 yuan is more painful than 100 yuan. Strongly about three times.
This is most clearly reflected in the contract investment. When you see the contract loss feeling is different from when you see the contract profit, the loss and loss feeling in front is three times that of happiness in the back. Because of this, in the actual operation process, you can't help but be restrained by instinct. As long as you lose, you will carry it hard, expecting it to bounce back, because at this time, closing the position is equal to a loss. This feeling of loss is too strong. It's hard to make it even; it's just the opposite when your contract is profitable. As long as there is a profit, and the profit drops slightly, you will want to settle it immediately so that the profit will not disappear.
The power of the devil behind the contract is very powerful. It attracts you like a huge black hole. It attracts you to always make the wrong decision. It attracts you to jump out of the contract market and want to win more after winning. , Want to return to the capital after losing. This kind of loss aversion based on human nature genes is the devil power behind the contract!
These behaviors have happened many times, and they happen again and again every day, and will continue to happen in the future; these behaviors happen not only to others, but also to you, and it will happen to every person involved in contract transactions. , This is the necessity of human nature.
3. The market is too small, the volatility is too large, the liquidity is not enough, and there is too much artificial manipulation
We all know that the digital currency market is a very niche market. At present, the market value is very small and the volatility is very high. Therefore, when you use high leverage, you are actually betting against high volatility. The probability of losing is very high.
Up to now, the total market value of the entire digital currency market adds up to the market value of a large and medium-sized traditional listed company, which is a little far behind the giant companies such as Apple, and the volume is very small. If the entire digital currency market is regarded as a medium- to large-scale listed company, then it is not very difficult for the capital tycoons to manipulate such a company alone.
And the liquidity of the entire digital currency world is not sufficient. If you look at the order book of the exchange, you will often find that there is a big gap between the price and the price, which means that when a sharp fall occurs, The price will fall in the form of triple jumps, especially when the fall comes suddenly, such as in the middle of the night or when it suddenly reverses, and this triple jump will cause the next one. The decline in triple jumps resulted in extremely deep declines, which in turn, sometimes rebounded too high.
In addition, the entire digital currency market lacks supervision. Those capital crocodiles who wish to profit from it can sway and use the existing rules “reasonably and legally” to use these financial instruments to make profits. Some exchanges also follow these capital crocodiles In the joint sitting, one party provides funds and the other party provides intelligence, which includes the customer's specific positions and specific points. In this way, the capital predator can calculate in advance the funds needed to explode the position, so as to complete the accurate sniping, and then pick it up from a very low price to complete this set of "precision" operations.
Do n’t underestimate the power of big brothers, and do n’t underestimate capital ’s desire for profit, as I often say, if something is profitable and the profit is high, then someone will definitely do it !
4. A few scenarios suitable for contract transactions
Is the contract transaction completely useless? It cannot be said that such an absolute, a product design, and such a large market, there must be some reasons behind it.
I think if you want to do contract trading, there are only two reasons:
The first is that you have to do risk hedging on the spot. It is feasible to treat contracts as traditional financial futures for hedging and to use contracts for risk management, and it should be the main purpose of the contract;
The second is that if you must participate in contract trading, it is best to use a computer program to do quantitative trading. The generation, issuance, opening, closing, closing, take-profit and stop-loss of instructions are all executed by the machine. The strategy can be iterated over and over, optimizing your strategy based on the data of profit and loss. More importantly, the execution of the machine can completely eliminate the impact of emotions and limit the "devil power" of the contract to a minimum.
Leverage and contract trading look like the fastest way, but it is by no means the nearest way;
The "fast" mentioned here is more often a quick break from liquidation and bankruptcy, rather than a fast break from wealth.
Finally, once again, it is strongly recommended that ordinary people stay away from contract trading!