Many newbies don’t understand what spot, contracts, leverage, long, short, liquidation, position closing, and position closing are. You will understand after reading this article!
1. Spot: directly buy the coins that have been listed and then sell them to make money when the coins rise.
2. Contract: a derivative of buying coins. By judging the future market ups and downs, choose to go long (buy up) or short (buy down) to earn the ups and downs.
3. Leverage: Used in conjunction with contracts to increase the leverage ratio. The more leverage ratio you have, the more you earn, and the risk is proportional to it. A high leverage ratio means high returns and high risks, while a low leverage ratio means low returns and low risks.
4. Go long (bullish): Believe that the price will rise in the future, buy bullish. Profit = principal × increase × leverage ratio. Loss = principal × decrease × leverage ratio.
5. Short selling (short position): think that the price will fall in the future, and sell bearish. Profit = principal × decline × leverage ratio. Loss = principal × increase × leverage ratio.
6. Liquidation
Long position explosion: The principle of long position is to be bullish on the future market. First borrow money to buy, then sell at a high price to make a profit, pay back the borrowed funds, and the rest is profit. If the long position encounters a falling market, the loss will reach the account margin and the position will be forced to close, and the money in the account will be directly cleared. For example, at a certain price, you think it will rise in the future, so you open a 10x long position, that is, the long money is ten times the margin. Your margin is 10,000 U, and 10x long position is equivalent to the exchange lending you 90,000 U first. You use this 100,000 U to open a long position. The price of the currency falls by 10%, which means that you have lost 10,000 by opening a position of 100,000, and your principal is only 10,000, and the remaining 90,000 is borrowed. In order to prevent you from not being able to pay it back, the exchange will forcibly take back the 90,000 lent to you, and because you have lost 10,000, there is no money in your account, and it is zero. This is a long position explosion.
Short position explosion: The principle of short position is to be bearish on the future market. First, borrow coins to sell. If the price drops, buy the same coins at a low price and return them to the borrower. The remaining money is the profit. If the short position encounters a rising market, the money previously borrowed to sell is not enough to buy back the same number of coins at a high price. It will be forced to buy back. At this time, the price of the coin is higher than the opening price. Your principal plus the loan can only buy back the same number of coins. After returning the coins, your money is gone. For example, if you short a certain currency at a price of 10,000 U, and your margin is 10,000 U, it is equivalent to the exchange lending you 9 coins worth 90,000 U at this time plus your coin worth 10,000 U, a total of 10 coins. You sell them first, and then buy 9 coins at a low price after the price drops and return them to the exchange. The rest is profit. But if the price rises by 11%, the price is 11,100 U. The 100,000 U you sold before can only buy 9 coins at this time. But the exchange has borrowed 9 coins from you before, so you can only buy 9 coins at most. In order to prevent the price from rising further, the exchange will force you to use the 100,000 U you sold to buy 9 coins with your short position money. At this time, your principal is gone. This is a short position explosion.
7. Margin Trading: The market rises and falls too quickly, and the coin price reaches the liquidation price, but the position cannot be forced to close in time due to rapid fluctuations, resulting in the inability to repay the borrowed money or coins. Not only will the funds be liquidated and return to zero, but you will also owe money to the exchange.
8. Close position: The act of manually terminating a contract transaction, taking profit or loss. Investing is risky, so we must learn to avoid risks.
About BTC halving:
Bitcoin is expected to halve on April 20, which will be one of the most important events in the future.
Although this halving event is also good news, compared with the previous two halvings, everyone should lower their expectations. Because this halving will not have a big impact on the supply of Bitcoin. Bitcoin has entered the trading era and the mining era has long ended. At present, the total issuance of Bitcoin is close to 21 million, and 19.67 million have been mined, with a mining rate of 93.7%. Next, let's take a look at the impact of previous halving events on the market:
The first halving (2012/11/28): Ancient times, no longer mentioned;
The second halving (July 9, 2016): Before the halving, the price of Bitcoin first rose by 70%, and then fell back by 30%. In the following week, the market did not fluctuate much, but entered a month of decline, with a drop of 30%. Then, Bitcoin began a historical level rise for one year and four months, and finally reached its peak in December 2017.
The third halving (2020/05/11): Before the halving event, the price of the pie first fell by 70% and then increased by 2.6 times. Then, after the halving event, the price of the pie did not fluctuate significantly, but remained within a 10% range for two months. After that, the pie started to rise by 40%. In May 2021, the pie finally peaked.
The fourth halving (2024/04/20): Before the halving event, the price of Bitcoin first rose by 60%, and then fell back by 18%. At present, the halving event has not yet occurred, so we will wait and see.
In summary:
Halving events usually bring benefits to Bitcoin, but expectations need to be lowered. Generally speaking, the long cycle after the halving event is definitely beneficial, but it takes about two months to realize. In the three to four months before and after the halving, Bitcoin's trend does not have an obvious ups and downs. It is important to note that the 2020 halving event was affected by the epidemic, while the 2024 halving event was affected by the special circumstances of ETFs.
Summarizing the BTC halving data, there are several conclusions. Detailed data will be announced in the community:
1. Taking the halving day as the observation day, by the end of the bull market, the BTC price will definitely reach a new high.
2. In the 1-3 weeks after the halving, the BTC price usually does not experience a significant drop and is relatively stable.
3. One month after the halving, the BTC price will fluctuate by more than 10%.
4. The period from halving to the peak of the bull market is relatively long.
5. The triangular range of this oscillation coincides with the fluctuations during and after the halving. This shows that the main force has already laid the groundwork for BTC’s future and is only waiting for a breakthrough.
Let me tell you how to ambush the popular currencies in the hot sectors in advance.
Secondly, we should also pay attention to the rotation rules within the sector to avoid focusing only on currencies with larger increases.
Choosing the right currency is our opportunity. The following hot sectors are worth paying attention to:
RWA: For currencies involving stablecoins and decentralized finance, the more prominent ones are Ondo, MKR, Rio, and ENA as well.
Meme: Meme coins represented by Doge, Shib and Aidoge.
Solana: TNSR which has recently exploded.
AI Artificial Intelligence: Application of WLD, AGIX and other currencies in the field of AI.
Blockchain games: Gala, Starl, Sand and other blockchain game currencies, such as the recently popular x314
