If you are a newcomer to cryptocurrency and are both curious and afraid of the term 'contract trading', this article will explain the core gameplay of contract trading in the simplest way. 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, but the bet is on the price trend of cryptocurrency. The three core elements: 1. Leverage: equivalent to a gear amplifier in the game, using 1 yuan of capital to leverage 10 yuan, 50 yuan, 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 a guarantee (minimum 5 USD for USDT-based contracts) 3. Long and short positions: choose 'go long' if bullish, 'go short' if bearish, and trading is available 24 hours a day. 2. 5 Key Operations Every Beginner Must Know 1. Opening a position is like buying a ticket: - Choose BTC/USDT perpetual contract - Click 'Buy Long' or 'Sell Short' - Set the leverage (it's recommended that beginners start with 5 times) 2. Margin calculator: Assuming you use 100 U as capital to go long on BTC with 10 times leverage, the actual available amount = 100 U × 10 = 1000 U When BTC rises by 1%, profit = 1000 U × 1% = 10 U (yield 10%) 3. Forced liquidation red line: If the maintenance margin rate falls below the exchange's requirement (usually 0.5%-1%), liquidation will occur. Formula: Liquidation price = opening price × (1 ± leverage × maintenance margin rate) 4. Setting take profit and stop loss: It is recommended that beginners set for each trade: - Stop loss line: 2-3% of capital - Take profit line: 5-8% of capital 5. The golden rule of position management: - Each trade should not exceed 5% of total funds - Do not hold more than 3 varieties at the same time - Leverage should be inversely proportional to position size (high leverage with low position) 3. Pitfall secrets that experienced traders won’t tell you Fatal misconception 1: The higher the leverage, the faster you earn - With 10 times leverage, a 1% fluctuation in BTC means a 10% fluctuation in your account - At 100 times leverage, a 1% fluctuation can lead to liquidation - Real case: In 2021, the LUNA crash saw 100 times leveraged players wiped out in an hour. Fatal misconception 2: Frequent trading can seize opportunities - Each trade incurs a 0.05%-0.1% fee - Trading 10 times a day leads to monthly fees of up to 15%-30% - Data shows: 92% of users trading more than 50 times a month lose money. Fatal misconception 3: Following experts' calls will lead to profits - Callers may open both long and short positions simultaneously - Delayed transactions can lead to slippage losses - In 2023, a certain KOL called for ETH, and followers averaged a 37% loss. Survival rules: 1. Practice on a demo account for 1 month before real trading 2. Prepare 3 independent accounts: 10% for practice / 30% for main trading / 60% for backup 3. Record a trading log daily, noting the rationale for 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). During the beginner stage, it’s recommended to set the goal of 'keeping 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, what it lacks are traders who survive.
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