I have seen quite a few contracts get liquidated. I want to share a few of my thoughts.

Contracts can be traded, but you should never let your initial investment exceed 5% of your total assets, and your net long or net short leverage should not exceed 3X.

Contracts rely on skill, and market trends can be leveraged with small investments. The risks are extremely high!!!

Those who succeed in this round of contracts, like Lang Lang, managed to grow their contract from $1,000 to $10 million, a ten-thousand-fold return. They do not gamble big.

For example, when his profits exceeded $4.5 million, he only kept about $300,000 to $500,000 in the contract account, withdrawing all other profits. It was also luck and top-tier skill. Riding a wave of explosive growth, he directly achieved total profits exceeding $10 million.

Contracts are a way to hone your trading skills; their advantage lies in being able to go long or short, and they can multiply your profits and losses.

Assuming you have $100,000, if you take $5,000, you cannot consistently grow $5,000 to $50,000 with low drawdown; then why do you think you can grow $50,000 to $500,000?

Therefore, if you want to trade contracts, do not risk more than 5% of your assets.

If you cannot grow a small amount with low drawdown to achieve 10X, then it is impossible to do so with a larger amount.

This also depends on talent and skill. Many people simply do not have the talent for trading. If you risk 3%-5% of your capital, at least you have room for trial and error. If you make mistakes 2-3 times, you would only lose within 15% of your total assets, and you would still have the opportunity to stand up again in a different suitable field.

In summary, here are a few points:

1: Trade contracts with less than 5% of your capital.

2: Total leverage net long or net short should not exceed 3X.

3: Going long is the way to make money; going short does not lead to wealth.

4: Anyone opening 10x+ positions is classified as a gambling dog; these individuals typically lose everything.

Many times now, I treat contracts like spot trading. Why?

Because the liquidity of contracts is 2-3 times higher than that of spot trading. Furthermore, the transaction fees are 70% lower.

For altcoins, closing a position of 1-2 million size costs at least 0.5% less than spot trading. As for funding rates, as long as the net long position does not exceed 10 days, most of the time, contracts are still more suitable.