💰 Must-read for newcomers! A beginner's guide to cryptocurrency from 0 to 1, avoiding pitfalls ｜ Spot vs Contracts beginner's guide
🚨 Why do I advise you to start with spot trading? Newcomers must understand the 3 major differences
1. Risk levels are worlds apart
✅ Spot: You can only lose your principal (if you invest 1000U, you can lose a maximum of 1000U)
❌ Contracts: With 10x leverage, a 10% drop can lead to liquidation, and you may end up owing money to the platform!
2. Learning costs are not on the same dimension
✨ Spot trading only requires you to master:
✅ Buy coins on exchanges (Binance/OKX beginner's tutorial)
✅ Understand price fluctuations by reading candlestick charts (MA moving averages/volume basics)
✅ Wallet transfers (don't transfer ERC20 to TRC20!)
💥 Contracts additionally require learning:
❗️ Full position/isolated position modes (full position can lose all margin)
❗️ Liquidation price calculation (formula: margin ÷ (leverage × contract value))
❗️ Funding rates (long and short positions pay each other, long-term holding may incur costs)
3. Different levels of psychological impact
📉 Spot can drop 30% and you can just lie down and play dead
📉 A 5% drop in contracts could wake you up in the middle of the night due to liquidation
🕳️ Hidden traps in contracts! 90% of newcomers have fallen into these pitfalls
1. Exchange mechanism traps
▪️ USDT-based (open positions with USDT) vs Coin-based (open positions with BTC)
▪️ Marked price ≠ real-time price (liquidation is calculated based on the marked price, which may incur a 5% loss)
2. Cost assassins
💸 Funding rates: charged every 8 hours, going long in a bull market incurs 0.1% daily, resulting in an additional 10% cost over 100 days!
💸 Slippage: With 100x leverage, a price difference of 0.5% when placing an order could lead to immediate liquidation
📈 Newcomer's learning path: step-by-step and steady
🔹 Stage 1: Practice with spot trading (1-3 months)
✅ Mandatory tasks
1. Use 100U to buy BTC/ETH (experience the entire process of depositing and withdrawing coins)
2. Check the trends of the top 10 cryptocurrencies on CoinMarketCap daily
3. Practical fixed investment: invest 50U weekly and stick to it for 3 months
💡 Goal: Understand 'Market Value = Price × Circulation', and be able to read simple candlestick charts
🔹 Stage 2: Contract simulation (only go live after 6 months)
✅ Preconditions:
▪️ Continuous profit in spot trading for 3 months
▪️ Be able to calculate your liquidation price (practice with the exchange's calculator)
✅ Safety strategies:
▪️ Use 5x leverage for the first time (don’t touch anything above 10x!)
▪️ Individual investment ≤ 2% of capital (max 200U for 10,000U)
▪️ Always set a stop loss when opening a position (calculate the stop-loss level using the ATR indicator)
❗ Newcomers' life-saving phrases
1. Try the simulation for 1 month first (Binance/OKX both have options, don’t directly lose money in live trading)
2. 99% of those flaunting contract profits don't show their liquidation records (survivor bias can be deadly)
3. Remember the formulas:
Spot loss = principal × drop
Contract loss = principal × leverage × drop; 10x leverage and a 10% drop = loss
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