Contract trading risk warning! You must avoid these pitfalls! Recently, many friends have been asking me about contract trading. As someone who has been through it, I must ring the alarm today! 🚨 Although contract trading offers tempting returns, the risks are indeed significant! A moment of inattention can lead you into a pit, losing everything! 😱 Today, I will summarize the common risks and traps in contract trading, along with super practical evasion techniques!
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⚠ Common risks & traps in contract trading
1️⃣ High leverage risk
The higher the leverage, the greater the returns, but the risks are also greater! Many people start with 20x or 50x leverage, and when the market fluctuates slightly, they face liquidation without a chance to recover!
2️⃣ Slippage risk
When the market fluctuates violently, the execution price of orders may differ significantly from the expected price, especially with low liquidity coins, slippage can lead to substantial losses!
3️⃣ Forced liquidation risk
When the margin is insufficient, the system will forcibly liquidate positions, especially during violent market fluctuations, you might not even have time to add margin before being liquidated, causing your mindset to collapse!
4️⃣ Emotional trading
Many people rush to increase their positions when they see losses to break even, or they become greedy when in profit and fail to take profits, resulting in greater losses and lesser gains, ultimately ending up with nothing!
5️⃣ Platform risk
Some small platforms may engage in dubious operations like pinning, unplugging, or running away, making fund safety impossible to guarantee!
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🛡 Tips & methods to avoid risks
1️⃣ Control leverage, operate steadily
Newcomers are advised to start with low leverage (below 5x) and gradually increase after familiarizing themselves with the market. Never be greedy; staying alive is the hard truth!
2️⃣ Set take profit and stop loss
You must set take profit and stop loss points in advance to avoid emotional trading. Secure profits promptly and cut losses decisively; protecting your principal is the most important!
3️⃣ Choose highly liquid coins
Try to trade mainstream coins (like BTC, ETH) and avoid small coins to reduce slippage and liquidity risk.
4️⃣ Diversify investments to reduce risk
Do not invest all your funds in contract trading, and definitely do not go all-in on one coin. Diversifying investments can effectively reduce risk and avoid losing everything at once!
5️⃣ Choose reliable platforms
You must choose a well-reputed and highly secure large platform to avoid the black box operations of small platforms.
6️⃣ Keep learning and stay calm
Contract trading requires continuous learning and experience summarization. Maintain a calm mindset, and do not be swayed by market emotions.
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💡 Small suggestion
Contract trading is not gambling; it is a technical skill! You must have a clear trading plan and strictly adhere to discipline to survive in the market.
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