Want a slice of the pie in crypto contract trading but don't know where to start? Don't panic! Today I will teach you step by step how to get started, covering the basic knowledge and super practical skills of contract trading, especially for beginners! Hurry up!
1. What is Contract Trading❓
In simple terms, contract trading is like a 'betting game' on the price trends of digital currencies. You don't need to actually hold the digital currency; you just need to guess the price movements correctly to make money! For example, if you think Bitcoin will rise in the future, you open a long position; if you think it will fall, you decisively open a short position. This trading method does not require physical delivery, and profits can be achieved based on market trend judgments.
2. What types of contracts are there📑
1. Perpetual Contracts: They have no expiration limits and can be held indefinitely. Their prices are closely tied to spot prices and balance the profits of both long and short positions through a funding rate settled every 8 hours, essentially creating an endless price game.
2. Futures Contracts: They have a clear expiration time and are settled or delivered based on spot prices at expiration. Common seasonal contracts and next-season contracts fall into this category, just like a competition with a deadline, where results must be determined by the end.
3. Core Concepts and Operations🧐
1. Contract Size: The minimum unit of contract trading. The value represented by each contract varies for different digital currencies. For example, a BTC/USDT perpetual contract may represent 0.001 BTC for one contract, so it's essential to understand the 'value' of each contract when trading.
2. Leverage: This is a 'double-edged sword'! It allows you to leverage a small amount of capital for large investments, doubling profits while also increasing risks. With 10 times leverage, a principal of 1,000 can control a contract worth 10,000. However, the higher the leverage, the closer you are to the liquidation line, so use it cautiously!
3. Opening a Position: This can be divided into buying long (bullish) and selling short (bearish). For example, when the BTC price is 50,000 USDT, you can buy 10 long contracts with 50 times leverage, requiring only 10 USDT as margin to enter the market.
4. Closing a Position: This is the signal to end a trade and lock in profits or losses. You can choose to close at the market price for a quick resolution or set a limit price to close when the price reaches your desired point.
5. Forced Liquidation: When the margin is insufficient to maintain the contract, the system will forcibly close the position, helping you stop losses in a timely manner to avoid greater losses, just like putting a 'safety lock' on trading.
Four, Risk Control❗
1. Leverage Control: Beginners should not be greedy; leverage within 5 times is safer. With the same 10% price fluctuation, 10 times leverage may lead to liquidation, while 5 times leverage still allows for a buffer.
2. Stop-Loss Setting: Do not exceed 3% of your principal in a single stop-loss! For example, with a principal of 100,000, the maximum loss per trade should be 3,000. This way, even if you make three consecutive mistakes, you can still preserve most of your principal and have a chance to recover.
3. Currency Selection: Stick to mainstream coins like BTC and ETH! These coins have large market capitalizations, making them harder to manipulate by whales, and their price trends are relatively stable, making sudden spikes or drops less likely.
4. Trading Timing: Around 3 AM is a 'high liquidation period'; try to avoid it! Choose daytime trading (9:00 AM - 6:00 PM) for relatively more transparent markets and lower risk.
Contract trading in the crypto world can indeed bring high returns, but the risks should not be underestimated! Beginners must first grasp the basics, practice repeatedly using a demo account, and then test the waters with small amounts. Remember, steadily accumulating experience is key to ultimately winning in this game!
Can crypto contract trading make you 'rich overnight', but also makes you afraid to enter the market due to potential pitfalls?
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
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