If you are a beginner who has just come into contact with cryptocurrencies and are both curious and fearful of the term 'contract trading', this article will quickly help you grasp the core gameplay of contract trading in the simplest way possible. Just like learning new game rules, we will proceed in three steps: understand the rules, know the equipment, and master the strategies.

1. What exactly is contract trading?

Imagine you are betting with a friend on tomorrow's weather: if it rains, you win 100 yuan, if it’s sunny, your friend wins 100 yuan. Contract trading is essentially such a betting agreement, except that the bet is on the price trend of cryptocurrencies.

Three core elements:

1. Leverage ratio: Equivalent to a game’s equipment enhancer, using 1 yuan of principal to leverage 10, 50, or even 100 yuan in trading capital (mainstream exchanges provide leverage from 3x to 100x)

2. Margin mechanism: Like a rental deposit, you need to deposit initial funds as collateral (minimum 5 USD for USDT-based contracts)

3. Bidirectional: Choose 'Long' for bullish and 'Short' for bearish, trading available 24/7

2. 5 key operations that beginners must know

1. Opening a position is like buying a ticket:

- Choose BTC/USDT perpetual contract

- Click 'Buy to open long' or 'Sell to open short'

- Set the leverage ratio (it is recommended that beginners start with 5x)

2. Margin calculator:

Assuming you use 100U of principal to open a 10x leverage long position on BTC

Actual operable amount = 100U × 10 = 1000U

When BTC rises by 1%, profit = 1000U × 1% = 10U (return rate 10%)

3. Mandatory liquidation red line:

Maintaining a margin ratio below the exchange’s requirement (usually 0.5%-1%) will lead to liquidation

Formula: Liquidation price = opening price × (1 ± leverage ratio × maintenance margin rate)

4. Take profit and stop loss settings:

It is advised for beginners to set for each trade:

- Stop loss line: 2-3% of principal

- Take profit line: 5-8% of principal

5. Golden rules of position management:

- No single trade should exceed 5% of total capital

- Do not hold more than 3 types of positions at the same time

- Leverage ratio is inversely proportional to position size (high leverage with low position size)

3. Pitfall secrets that veterans won’t tell you

Fatal misconception 1: The higher the leverage, the faster you earn

- With 10x leverage, a 1% fluctuation in BTC equals a 10% fluctuation in your account

- At 100x leverage, a 1% fluctuation directly leads to liquidation

- Real case: In 2021, LUNA crashed, and 100x leverage players lost everything in an hour

Fatal misconception 2: Frequent trading can seize opportunities

- 0.05%-0.1% transaction fee per trade

- Trading 10 times a day can lead to handling fees as high as 15%-30% per month

- Data shows: 92% of users who trade more than 50 times a month lose money

Fatal misconception 3: Following big players' calls will make you money

- Traders may open both long and short positions simultaneously

- Delayed transactions lead to slippage loss

- In 2023, a certain KOL called for ETH, and followers lost an average of 37%

Survival rule:

1. Practice with a demo account for 1 month before trading live

2. Prepare 3 independent accounts: 10% funds for practice/30% main account/60% backup

3. Record trading logs daily, noting the rationale behind each trade

Conclusion:

Contract trading is essentially a probability game, and professional traders usually have a win rate of only 55%-60%. Remember this core formula: Long-term profit = (Win rate × Average profit) - (Loss rate × Average loss). It is advised for beginners to set a goal of 'keeping monthly losses within 5%'. Only when you can achieve this for three consecutive months can you truly step into the world of contract trading. Always remember: the market is never short of opportunities, but traders who can survive are scarce.

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