Why do some people say that trading cryptocurrencies should not involve contracts?

Contracts are not just limited to 100x and 125x options.

One wrong move and you could get liquidated. How big is that move?

In fact, high-leverage contracts are pure gambling.

Of course, if you play with a few hundred dollars, it's not a big deal. But if you go all-in with high leverage, that's purely a suicidal behavior.

To put it simply, contracts are meant to improve your capital efficiency. The cost of perpetual contracts is the funding fee, while the cost of futures contracts is the premium. Of course, this cost can be 0 or even negative. I won’t elaborate on this here. #Bitcoin

Many people do not have their own trading system and have poor risk tolerance. They lack strict trading discipline and like to hold onto losing positions. Therefore, they might feel that if the spot price drops 30%, it’s not a problem for them, but a 3x contract could wipe them out. $BTC

This is completely wrong. Firstly, being able to bear a 30% loss indicates that you do not have strict trading discipline and are purely gambling in the market. You might claim to be a long-term investor, but long-term investing should not involve opening contracts because it brings additional costs and risks.

If you have a strict stop-loss, being able to bear the loss from a wrong trade is your reason for opening a contract. #CryptoCommunity

For example, if you have 100,000, the current price of BTC is 100,500, and you believe that 100,000 is an important support level that won’t be broken, with a stop-loss in place, you can bear a loss of 10,000 and are willing to use this cost to take a chance. You can consider opening a 20x position, as long as it stays within your acceptable loss range; however, if you do not set a stop-loss, when it drops to 95,000, you will have already been liquidated and lost everything. #CryptoWealth

So do you understand? When opening a contract, you must know what your maximum loss is and stay within your acceptable range. #Bitcoin

Alternatively, it could be to improve capital efficiency, knowing that it is currently a bull market, and all currencies are rising, making big corrections unlikely.

To improve capital efficiency, you can use no more than 3x leverage to allocate different cryptocurrencies. This is also reasonable.

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