Hello everyone! As a newcomer in the crypto space, facing a dazzling array of digital currencies and complex trading operations, many people want to soar, but often take the wrong path. Especially when deciding whether to enter contract trading, many novices often feel anxious or blindly follow others, leading to losses. Today, I will share some practical entry-level knowledge in the crypto space to help you start with spot trading, learn steadily, and progress steadily.
1. Spot Trading: The best starting point for newcomers in the crypto space
Why is spot trading more suitable for beginners?
1. Risk Level:
Spot Trading: The maximum loss is the principal going to zero. If you invest 1000 yuan, the worst-case scenario is losing all 1000 yuan, but there are no other significant risks.
Contracts: Not only can you face liquidation, but you may also end up in debt! Especially when using high leverage, a slight misstep can lead to 'liquidation and debt'. For example, with 10x leverage, if the price drops by 10%, you lose 100%. If you operate carelessly, your losses can far exceed your principal.
2. Learning Curve:
Spot Trading: Simple to learn, mainly involves buying and selling operations, basic market analysis, and wallet transfers. The focus is on understanding market dynamics and cultivating market perception.
Contracts: In addition to buying and selling operations, you also need to master additional knowledge such as leverage selection, margin calculation, and liquidation price alerts. The strategies for contracts are more complex and require comprehensive consideration of leverage, funding rates, stop-loss, and take-profit factors.
3. Mindset Management:
Spot Trading: Relatively low volatility, which can help you cultivate a calm market perception, suitable for beginners to accumulate experience.
Contracts: Due to high volatility, many beginners can easily engage in emotional trading due to short-term drastic fluctuations, ultimately leading to losses. Contract trading can make you overly anxious, affecting your decision-making.
2. Contract Trading: Hidden thresholds, be very careful!
Even if you have a grasp of spot trading, there are still many traps in the contract market that beginners easily overlook. As a newcomer, do not rush into the contract market, especially when you do not understand its mechanisms.
1. Differences in Exchange Mechanisms:
Contract exchanges have different trading models (cross-margin, isolated margin), different contracts (USDT-based, coin-based), and different mark prices and latest prices. Trading recklessly without a deep understanding can easily lead to misjudgment.
2. Hidden Costs:
Funding Rate: A funding fee is charged every 8 hours, and if you hold a position for a long time, this cost can accumulate significantly, affecting your final returns.
Slippage: Under high leverage, even minor price fluctuations can lead to you being unable to buy or sell at the expected price, or even trigger forced liquidation.
3. Strategy Complexity:
Spot trading strategies are relatively simple: for example, dollar-cost averaging, buying in batches, taking profits in batches, etc.
Contract trading strategies are more complex: you need to master grid trading, swing trading, hedging, and other techniques, which cannot be learned overnight.
3. From Spot to Contracts: The Best Path for Phased Learning
Stage 1: Basic Learning of Spot Trading (1-3 months)
Essential Content:
Learn to buy and sell BTC and ETH on mainstream exchanges (such as Binance, OKX).
Learn to view the top 50 ranked tokens in the market and understand basic indicators such as market capitalization, circulation, and trading volume.
Practical Goals:
Complete at least 10 spot trades.
Learn to transfer tokens from exchanges to personal wallets.
Stage 2: Contract Trials (after 6 months)
Prerequisites:
Stable profits for more than 3 months and familiarity with the basics of spot trading.
Can clearly explain concepts such as 'funding rate' and 'liquidation price'.
Safety Strategies:
Beginners are advised to use leverage below 5x.
Do not risk more than 2% of your principal in each trade.
You must set stop-loss and take-profit levels to avoid emotional trading.
It is best to first observe a bull market cycle and learn to perceive market sentiment.
4. Key Recommendations for You
1. Start with a simulated account:
Most exchanges (such as Binance, OKX) provide contract simulation trading. Even if you have already mastered some spot trading knowledge, it is advisable to simulate for at least 1 month. Only when you are completely familiar with the operations should you consider real trading.
2. Beware of the 'get-rich trap':
Many posts on social media showcasing profits from contracts usually do not reveal the liquidations and losses they have experienced. Behind success are many lessons from failures; everyone must be wary of the 'get-rich-quick mentality'.
3. Remember these two formulas:
Spot loss speed: Principal × Price drop percentage
Contract loss speed: Principal × Leverage multiplier × Price drop percentage
These two formulas show that the speed of losses in contract trading is multiple times that of spot trading. Be very cautious!
5. Common Questions from Newcomers
Q: What to do when I see others making tens of thousands in contracts in a day?
A: Statistics show that 98% of new contract traders lose money within 6 months; fortunately, what you often see are the stories of survivors! Do not blindly follow others just because they seem to profit easily.
Q: When can I start learning about contracts?
A: The best time to enter the contract market is only when you can answer the following questions:
Why does the halving of BTC affect the price?
What is the Gas fee mechanism of Ethereum?
How to determine whether a project's TVL (Total Value Locked) is genuine?
Summary
The most important rule in the crypto space is — survive. Spot trading is the safest starting point for learning, helping you build a solid foundation. Only after you fully understand the market and master basic operations will contracts become part of your investment tools, rather than gambling tools.
I hope every newcomer in the crypto space can steadily progress through continuous learning, avoid blindly following trends, and make every step wisely.
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