Can you really play in the crypto world? How to trade contracts? A must-read for beginners!

Many people are very interested in contract trading in the crypto world but do not know where to start. Today, I will systematically explain the basics of contract trading + practical tips,

1. What is contract trading❓

In simple terms, contract trading = you predict the price movement to earn the money in between,

You don't need to actually hold the coins; as long as your directional judgment is correct, there is a chance to make a profit.

For example, if you think BTC will rise, you go long; if you think ETH will fall, you go short. As long as the direction is correct, there will be profits.

2. What types of contracts are there?

Perpetual contracts: No expiration time, supports holding at any time and closing positions at any time

Maintained pegging to spot prices through funding rates

Delivery contracts

Have a fixed delivery time (e.g., quarterly/next quarter)

Automatically settled or delivered based on the spot price after expiration

Beginners are generally advised to start with perpetual contracts, as trading is flexible.

3. Core concepts of contracts

Contract size: Minimum trading unit

For example, 1 BTC perpetual contract = 0.001 BTC

Leverage: Small funds leverage large funds

With 10x leverage, 100U can open a position of 1000U (profits and risks are amplified simultaneously)

Opening direction:

Buy to go long → You think prices will rise

Sell to go short → You think prices will fall

Closing methods:

Market closure: Immediate transaction

Limit closure: Transaction at a specified price

Forced liquidation mechanism:

When your losses reach a certain level, the system will forcibly close your position to protect your account from going into debt.

4. Risk control suggestions (Key points!)

Control leverage multiples

Beginners are recommended to keep it within 3-5 times to avoid large fluctuations

👉 With 10x leverage, a 10% drop in the coin price could lead to liquidation; low-leverage large positions and high-leverage small positions require the same margin. In a word, control the margin for opening positions.

Set stop-loss and take-profit

Suggestion: The maximum loss per trade should not exceed 5-10% of the principal,

For example, with a principal of 10,000U, the maximum loss per trade is 500U → Leave room for recovery

Prioritize mainstream coins

Mainstream coins like BTC/ETH are less affected by controlled trading, have more stable trends, and are less likely to experience sudden spikes

Avoid high-risk time periods

The hours between 2-4 AM are a "high liquidation period"

It is recommended to operate during the day (from 9 AM to 6 PM), where fluctuations are controllable and signals are clearer

Lastly: Don’t fantasize about getting rich quickly, and don’t use all your assets to test the waters!

May you earn in the crypto world not by luck, but by skill and stability.