Newcomers to the cryptocurrency world often make common mistakes; this is pure information, take your time to read!

Contract Leverage++

1: Some newcomers still do not understand what contract leverage is, thinking that 100 times the risk must be higher than 1 time, but they are actually the same. Taking the exchange I use as an example, opening a position with 1x leverage and opening a position with 100x leverage will have the same floating profit and loss. The level of risk depends on your judgment of the trend, the entry point, and importantly, the management of your position.

2: So how should you choose the leverage multiple? Personally, I prefer 100x leverage. Again, taking my exchange as an example, you can open more positions at 100x than at 1x, which means that the margin requirement is much smaller. If the trend is correct but my entry point is poor, I can use the leverage to average down, turning a loss into a profit. Averaging down is for better profitability, not to increase your risks.

Averaging Down and Position Management

As mentioned above, averaging down is for better profitability, not to increase your risks. Many novice friends may not know how to average down and how much to add. I usually choose to average down at resistance and support levels, not averaging down at the same level, but doubling or tripling my position can achieve quick profits and thereby reduce risk. As for position management, I will share my personal experience: I usually enter with a 25% position, or even less. Regardless of how strong the trend is, I always do this. I never enter with a 50% or 100% position. As for why, I believe everyone knows that entering with a larger position increases risk, as you get closer to the liquidation price, making it inevitable to encounter poor entry points or market spikes, so this helps to better control risks.

Take Profit and Stop Loss

Making money is not the hallmark of an experienced trader; knowing when to stop loss is what defines an experienced trader. This phrase is understood, but few can actually do it. Newcomers in this field must develop the habit of preventing originally profitable trades from turning into losses. Taking my own example, I have developed a good habit of setting take profit and stop loss; one must not be too greedy. If I see a bullish trend in the hour, I will go long near the support level. After making a profit, I will decide to take some profit off the table while leaving a portion to continue rolling.

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