Should beginners choose spot trading or contracts?
For newcomers in the cryptocurrency space, it is strongly recommended to start learning with spot trading and only consider contracts after fully mastering it.
1. Why is spot trading more suitable for beginners?
1. Risk Level
Spot: Loss limit = capital goes to zero (e.g., with 1000 yuan, the maximum loss is 1000 yuan)
Contracts: Possible liquidation leading to owing money (the higher the leverage, the greater the risk; with 10x leverage, a 10% drop results in a 100% loss)
2. Learning Curve
Spot trading only requires mastering:
✅ Buying and selling operations
✅ Basic market analysis
✅ Wallet transfers
Contracts require additional mastery of:
❗️ Leverage selection
❗️ Margin calculation
❗️ Liquidation price alerts
❗️ Funding rate arbitrage
3. Psychological Impact
Spot trading has relatively mild fluctuations, suitable for developing market perception
The intense volatility of contracts can easily lead to emotional trading (a common pitfall for beginners)
2. Hidden Thresholds of Contracts (easily overlooked by beginners)
1. Differences in Exchange Mechanisms
Full margin vs. isolated margin modes
Differences between USDT contracts and crypto contracts
Differences between mark price and latest price
2. Hidden Costs
Funding rates (charged every 8 hours; long-term holding may accumulate high costs)
Slippage issues (with high leverage, even small price differences can trigger liquidation)
3. Complexity of Strategies
Simple spot trading strategies: Dollar-cost averaging, partial profit-taking
Contracts require pairing with: Hedging, grid trading, swing trading, etc.
3. Suggested Learning Path (phased)
Phase 1: Basics of Spot Trading (1-3 months)
Essential Learning Content
Buy BTC/ETH from an exchange (recommended Binance/OKX)
Learn to check the top 50 tokens on CoinMarketCap
Understand basic indicators such as market capitalization, circulating supply, and trading volume
Practical Goal
Complete more than 10 spot trades
Attempt to transfer tokens from the exchange to the wallet
Practical Goal
Phase 2: Attempting Contracts (after 6 months)
Prerequisites
Continuous profit from spot trading for over 3 months
Able to accurately explain concepts like "funding rate" and "liquidation price"
Safety Strategies
Use leverage of 5x or below for the first time
Single trade should not exceed 2% of capital
Must set stop-loss
Establish your own trading discipline (e.g., rules for profit-taking and loss-cutting)
Participate in a bull market cycle to observe market sentiment
4. Key Recommendations
1. Start with a simulation
Both Binance and OKX have contract simulation trading features; it is recommended to simulate for at least 1 month before trading live
2. Beware of "get-rich-quick traps"
Those showcasing contract profits on social media often do not display more liquidation records