What is a perpetual contract? As the name suggests, it is a contract with a perpetual duration. In the current digital currency derivatives trading market, perpetual contracts are considered a relatively new type of contract. The meaning of a perpetual contract is that, under the condition of not being liquidated, if you do not actively close your position, you can hold this contract indefinitely. So how much leverage is reasonable when trading? Let me explain in detail (I suggest liking and saving this to avoid not being able to find it later).
For example, if you use 50x leverage or 30x leverage. Taking Ethereum as an example, 30x leverage requires 88U, 50x leverage requires 53U, and 100x requires 26.5U. Under the same market conditions, my personal suggestion is to use only 100x leverage. Why? Because once you use leverage in a contract, whether it is 1x or 100x, you have the risk of leverage. The returns generated by 1x leverage and 100x leverage are worlds apart under the same market conditions. Some people might say that the risk of 1x leverage is low, which is true. For Ethereum, if you use 1x leverage, you currently need over 2650U for one contract. Without a significant price increase, you are definitely at a loss, considering the transaction fees. Moreover, even if there is no significant price increase, any profit will be minimal. What I want to express is that since you have chosen to trade with leveraged contracts, you should make good use of this leverage and only use 100x leverage.
In many cases, what happens is that you use thin funds to trade contracts that do not match your current capital. If the margin is low, it cannot support the current market conditions, which may lead to liquidation during a slightly larger market fluctuation. Once a profitable market comes, it has nothing to do with you, and at that point, the contracts we hold become invalid. Therefore, when trading perpetual contracts, under permissible conditions, we should appropriately increase our margin to be prepared for any situation. No matter what investment we make, there are risks involved. What we need to do is to minimize those risks and then consider the potential profits. Holding onto losing positions is a major taboo in contract trading. If the direction is wrong, it is essential to cut losses in time.
Timely loss-cutting, coupled with a position-by-position approach to reduce risk, is crucial. Don’t joke around with your principal. Set a daily target for yourself, and when you reach that target, take your profits promptly. Trading contracts will become very simple. Those who have been in contact with contracts for a long time know that if you have 5000U as capital, is it very simple to earn 50-100U daily? With some methods and strategies, it becomes even simpler. Earning 50-100U in one day means how much in a month? 1500--3000U! Of course, in actual operations, you may encounter significant market fluctuations or various unexpected events. To compromise, in a month of 30 days, as long as you achieve your daily target for 20 days, you are still in profit.
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