If you are a beginner just getting into cryptocurrency, curious yet afraid 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 the rules of a new game, we will proceed in three steps: understanding the rules, familiarizing with the equipment, and mastering the strategy. 1. What 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, but the bet is on the price movement of cryptocurrency. The three core elements are: 1. Leverage: equivalent to a game equipment enhancer, using 1 yuan of capital to leverage 10, 50, or even 100 yuan of trading funds (mainstream exchanges offer 3-100 times leverage) 2. Margin mechanism: like a rental deposit, you need to deposit initial funds as collateral (the minimum for USDT-based contracts is 5 dollars) 3. Long and short positions: choose 'go long' for bullish expectations and 'go short' for bearish expectations, trading is available 24/7. 2. Five key operations 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 (it is recommended that beginners start with 5 times) 2. Margin calculator: Assume using 100 U as capital to open a long position for BTC with 10 times leverage. Actual available amount = 100 U × 10 = 1000 U. When BTC rises by 1%, profit = 1000 U × 1% = 10 U (return rate 10%) 3. Forced liquidation red line: If the maintenance margin ratio falls below the exchange's requirement (usually 0.5%-1%), liquidation will occur. Formula: liquidation price = opening price × (1 ± leverage × maintenance margin ratio) 4. Take profit and stop loss settings: It is recommended that beginners set: - Stop loss line: 2-3% of capital - Take profit line: 5-8% of capital 5. Golden rules for position management: - No single trade exceeds 5% of total capital - No more than 3 different assets held at the same time - Leverage is inversely proportional to position size (high leverage with low position) 3. Pitfall secrets that veterans won’t tell you: Deadly misconception 1: Higher leverage means faster profits - With 10 times leverage, a 1% fluctuation in BTC equals a 10% fluctuation in your account - With 100 times leverage, a 1% fluctuation leads to immediate liquidation - Real case: In 2021, LUNA crashed, and players with 100 times leverage lost everything in an hour. Deadly misconception 2: Frequent trading can seize opportunities - Each trade incurs a fee of 0.05%-0.1% - Trading 10 times a day can lead to monthly fees of 15%-30% - Data shows that 92% of users trading more than 50 times a month incur losses. Deadly misconception 3: Following experts’ calls guarantees profits - The person giving the call might be simultaneously opening long and short positions - Delayed transactions lead to slippage losses - In 2023, when a certain KOL called for ETH, followers lost an average of 37%. Survival rules: 1. Practice on a demo account for 1 month before trading live 2. Prepare 3 independent accounts: 10% for practice / 30% for main trading / 60% for backup 3. Keep a daily trading log, noting the decision basis for each trade. Conclusion: Contract trading is essentially a game of probability, and professional traders typically have a win rate of only 55%-60%. Remember this core formula: Long-term profit = (win rate × average profit) - (loss rate × average loss). As a beginner, aim to 'control monthly losses within 5%'; when you can achieve this for three consecutive months, you will truly step into the world of contract trading. Always remember: the market never lacks opportunities, but it lacks surviving traders.
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