In March 2025, a myth circulated in the crypto world about a '95 post-nurse turning 100 times in 7 days': she used 5,000 principal to open a 10x leverage long position in Bitcoin, closing when it rose from 28,000 to 38,000, netting 50,000. But on the same day, Shanghai white-collar worker Xiao Wang went bankrupt from holding positions, losing 100,000 principal — this is the magical reality of contract trading: some use it to achieve class jumps, while more fall as 'liquidation cannon fodder.'
As the 'risk ceiling' in the crypto world, contract trading is like a roller coaster with leverage, magnifying profits 10 times but also potentially reducing the principal to zero instantly. However, grasping 5 core iron rules allows beginners to seize opportunities to get rich amidst crashes and surges while controlling risk.
This article will reveal the underlying logic and practical skills of contract trading in a language that even a market vendor can understand.
1. What are contracts? A 'bet on price rises and falls' game simpler than buying vegetables.
1. Contracts vs Spot: The essential difference is like 'paying a deposit to order.'
Spot trading: You spend 100 yuan to buy 1 apple, sell it when the price rises to 150 yuan, earning 50 yuan (profit 50%).
Contract trading: You pay a 10 yuan deposit (margin), betting that an apple will increase in price. If it rises to 150 yuan, the platform settles at 100 yuan, and you earn 50 yuan (principal multiplies by 5); but if it drops to 90 yuan, the platform forcibly closes the position, and you lose 10 yuan of principal (liquidation).
Core principle: Using a small amount of margin to leverage 'full transactions,' magnifying both profits and risks (leverage ratio = full amount / margin, such as 10x leverage = 10 yuan margin buys 100 yuan asset).
2. Going long vs going short: The 'two-way profit' opportunity.
Opening long (going long): Believing the coin price will rise, first buy the contract at a low price, then sell high after it rises (e.g., open long on Bitcoin at 30,000, close at 40,000, profit 10,000 per contract).
Going short: Believing the coin price will drop, first sell the contract at a high price, then buy back at a low price to take profit (e.g., opening short on Bitcoin at 40,000, closing at 30,000, earning 10,000 per contract).
Heaven-defying advantage: Can make money in both bull and bear markets. When the coin price drops 30%, those who go short can earn 300% (under 10x leverage).
Two, 3 core concepts beginners must learn: Understand these 3 points to reduce losses by 80% of principal.
1. Leverage: It is not a double-edged sword, but a 'dragon-slaying knife.'
Common leverage: 10x (low risk), 50x (medium), 100x (for experts only).
Deadly misconception: 100x leverage ≠ earning 100 times, but rather 'losing 100% of principal with a 1% fluctuation' (e.g., under 100x leverage, 10,000 principal buys 1,000,000 asset, a 1% drop means a loss of 10,000, leading to liquidation).
Iron rule: Beginners only use 10-20x leverage, veterans do not exceed 50x (2023 statistics: 99% of users using 100x leverage went bankrupt within 3 months).
2. Stop-loss and take-profit: The 'life-saving talisman' more important than making money.
Stop-loss: Set in advance 'how much loss must trigger an exit' (e.g., with a principal of 10,000, set stop-loss at 5%, losing 500 yuan automatically closes the position, avoiding holding until liquidation).
Take profit: Automatically cash out after reaching target profit (e.g., expecting to earn 20%, sell forcibly after making 2,000 to avoid losses if the market reverses).
Real case: In March 2024, Bitcoin crashed 30%. Users with a 10% stop-loss only lost 10% of their principal, while users without a stop-loss went bankrupt to zero.
3. Funding rate: The 'hidden mechanism' of earning money from opposing positions while lying down.
Principle: When long and short positions are unbalanced (e.g., 80% of users are long), the platform will make long position users pay funding fees to short position users, and vice versa.
Practical skills: During extreme market conditions (e.g., Bitcoin breaking key resistance), open a small reverse position to earn funding fees, which can yield 0.1%-1% daily (data from a platform in 2025: long-term funding fee users have stable annual returns of 15%+).
Three, practical tutorial: From account opening to ordering, 5 steps to master contract trading.
1. Choose the right platform: Avoid 'eating client losses' black platforms.
First choice: Binance, OKX, Bybit (low fees, good depth, no lag), reject small platforms (in 2023, a certain platform maliciously spiked prices, causing collective liquidations).
Key indicators: Check 'funding amount' (over 1 billion USD), 'number of positions held' (over 500,000), 'historical spike records' (the fewer, the better).
2. Position control: Use the '1% rule' to preserve principal.
Single position: Each opening position should not exceed 1% of total funds (e.g., with 100,000 principal, single opening position not exceeding 1,000 yuan margin).
Total position limit: All contract margin positions should not exceed 20% of total funds (to avoid simultaneous liquidation of long and short positions). For example: with 10,000 principal, under 10x leverage, single trade margin ≤ 100 yuan (corresponding to 1,000 yuan contract value), total holding margin ≤ 2,000 yuan.
3. Technical analysis: 3 must-see indicators to help you determine direction.
MA Moving Average: 50-day moving average crosses above 100-day moving average (golden cross), bullish; crosses below (death cross), bearish.
MACD: Red bars lengthen (bullish strength), green bars lengthen (bearish strength), divergence signals (price rises while bars shrink, may indicate a peak).
Support and resistance levels: Check previous highs and lows (e.g., Bitcoin at 32,000 is strong support, 40,000 is strong resistance), open positions in the direction after a breakthrough.
4. Ordering skills: Seize the golden opportunities during 'sharp rises and falls.'
Opening long during a crash: If the coin price drops more than 5% temporarily and touches a strong support level (e.g., Bitcoin drops to 28,000 in May 2025, rebounds 2% within 30 minutes, opening long can earn 20%).
Opening short during a surge: If the coin price rises more than 10% temporarily and reaches a resistance level (e.g., if Bitcoin tries to reach 45,000 but fails, opens short during a rapid drop, can earn 15% within 1 hour).
Taboos: Do not open positions during sideways fluctuations (70% of the time is in fluctuation; frequent operations will definitely lead to losses).
5. Exit strategy: Money that has been earned is real money.
Target achievement exit: Immediately take profit upon reaching the preset profit (e.g., 20%), do not be greedy.
Stop-loss exit: If it breaks the support level / breaks the resistance level, unconditional stop-loss (e.g., if the coin price drops below the previous low after opening a long position, exit immediately, do not gamble on a rebound).
Time stop-loss: If holding a position for more than 4 hours without reaching expectations, forcibly close the position (to avoid staying up all night watching the market; 2023 statistics show that users holding positions for more than 12 hours have a 3 times higher liquidation rate).
Four major death traps that beginners must avoid.
1. Trading blindly without watching the news: Policies can cause the coin price to halve instantly.
In 2024, Hong Kong tightened cryptocurrency regulations, Bitcoin dropped 15% in 2 hours, and users who didn’t watch the news directly went bankrupt.
Correct approach: Spend 5 minutes daily reading the 'Crypto Morning Report' to avoid policy black swans.
2. Holding against the trend: The 'liquidation accelerator' that leads to increasing losses.
Incorrect case: Xiao Wang opened long on Bitcoin at 40,000, did not stop loss when it dropped to 35,000, instead added positions, ultimately liquidating at 30,000, losing all 100,000 principal.
Iron Rule 2: Never hold positions! Close positions immediately when the stop-loss line is broken, keep the principal, and do not fear running out of fuel.
3. Frequent operations: Transaction fees eat up 80% of profits.
A certain user traded 50 times a month, spending 12,000 on transaction fees, ultimately earning only 5,000, losing 7,000.
Best frequency: Do not operate more than 3 times a week, just catch the key market movements.
4. Emotional trading: A death loop of increasing positions when making money and averaging down when losing money.
When making money, you feel like 'the Buffett of the crypto world,' adding 100x leverage; when losing money, you think 'just get back to break-even,' continuously averaging down, ultimately falling into the abyss.
Iron Rule 3: Write the trading plan down on paper, strictly execute it, and do not be swayed by emotions.
Five advanced strategies used by experts.
1. Hedging strategy: A 'winning formula' that makes money whether prices rise or fall.
Operation: Simultaneously open 10x long and 10x short positions (each taking 5% of the position), when the coin price fluctuates more than 2%, close the losing position and hold the profitable one.
Case: Bitcoin fluctuates between 30,000 and 40,000, using a hedging strategy to earn 5%-10% monthly, with risks close to zero.
2. Ladder-style increasing positions: The 'bottom-fishing tool' during a crash.
Steps: If the coin price drops 10%, open a long position of 1%; if it drops another 10%, open a long position of 2%; if it drops another 10%, open a long position of 3%, and so on.
Advantage: Lower average cost, a 15% rebound is enough to turn losses into profits (e.g., opening long at 30,000, if it drops to 24,000, total position 6%, rebound to 27,600 to break even).
3. Capital management: Use the 'liquidation price calculator' to stay safe.
Tool: Enter margin, leverage, and position quantity into the exchange app to automatically calculate the liquidation price (e.g., 10x leverage, 10,000 margin, liquidation price = opening price - opening price × 10%).
Iron Rule 4: Ensure the liquidation price is at least 20% away from the current market price (e.g., if Bitcoin opens long at 30,000, set the liquidation price at 24,000, leaving enough buffer space).
Six, the final advice for beginners: Contracts are not ATMs, but a 'cognitive monetization' battlefield.
1. Practice with a demo account first: Use 10,000 virtual funds for 3 months.
Recommended platform: Binance 'Contract Demo Account,' 1:1 replicating real trading, can reset if wiped out.
Goal: Achieve 'no liquidation within 3 months, win rate over 50%' before entering real combat.
2. Always remember: Contracts are 'icing on the cake,' not a 'gamble for a comeback.'
Correct mindset: Use no more than 20% of spare money to trade contracts; main income is fundamental (a worker earning 3,000 monthly can use 600 to trade contracts, don’t risk all savings).
3. Liquidation is not the end, but the beginning of growth.
Every liquidation is the best teacher: Record the reasons for liquidation (was it too high leverage? No stop-loss? Or emotional trading?), forming your own 'avoidance guide.'
You are only one 'clear mind' away from doubling your investment.
Crypto contracts are like a marathon with leverage; those who run fast may fall midway, but those who run steadily will laugh last. Remember:
10x leverage is not for making 10 times, but to turn a 10% increase into a 100% profit;
Stop-loss is not about cutting losses, but about using a 10% loss to preserve 90% of the principal.
True experts do not have a 100% win rate but use strict discipline to ensure that the money earned exceeds the money lost.
In the contract market, staying alive is more important than anything else; being alive means having the chance to seize the next 10-fold surge!
'Contracts are like tigers, leverage is like teeth; respect the market, and you can tame it!'
