How much leverage is reasonable for perpetual contracts?

Yesterday someone asked me how much leverage is appropriate when trading perpetual contracts. This question is actually quite simple, so today I will discuss with you

What is a perpetual contract?

A perpetual contract is a contract that "never expires"; as long as you don't get liquidated and don't close the position voluntarily, you can hold it indefinitely.

In theory, it is different from a futures contract, as there is no expiration date and it can be held perpetually.

So how much leverage should be used?

The choice of leverage directly affects the efficiency of capital use and the level of risk. For example:

30x leverage: 16U margin

50x leverage: 10U margin

100x leverage: 5U margin

I suggest using 100x leverage, but the premise is that you must understand the risks behind leverage. The higher the leverage, the greater the potential rewards and risks.

Why choose 100x leverage?

The core of leverage is to maximize returns. 1x leverage generates very small profits, while 100x leverage can rapidly amplify profits if the market moves in your favor. However, if the capital is too small to withstand volatility, the position will be liquidated.

Operational tips:

Sufficient margin: Ensure you can withstand volatility.

Timely stop-loss: Don’t wait until liquidation to cut your losses.

Steady profits: Set small daily targets, such as earning 50-100U on a 5000U principal, and accumulate gradually.

The key to trading perpetual contracts is not to blindly pursue high leverage but to reasonably control risk and set goals. Remember, don’t risk your principal recklessly; long-term stable profits are key!