How many times leverage should be used for perpetual contracts? 99% of retail investors are blown out by this question, how to avoid it?
How much leverage should be used for perpetual contracts?
This is the confusion faced by countless retail investors in trading. Today, we won't discuss market trends, but rather talk about how to rationally use leverage and avoid liquidation.
First, what is a perpetual contract? It is a contract with no expiration date, theoretically allowing for indefinite holding, as long as there is no liquidation or closing.
Because it does not have a delivery date, many traders consider it their preferred tool.
But here’s the problem, the higher the leverage, the higher the risk, right?
Actually, it’s not entirely so. Yesterday, I discussed contracts with a friend who likes to use 30x, 50x, or even tried 100x leverage.
This practice is very common among retail investors: using minimal funds to chase maximum volatility. It seems tempting, but the real question is whether you are prepared to handle the various risks that leverage brings?
Take BTC as an example: the current market price is about 116,000 U, 1x leverage requires 11,600 U margin;
10x leverage requires 1,160 U; 100x leverage only needs 116 U.
From a cost perspective, the higher the leverage, the lower the threshold, seemingly tempting.
But leverage is essentially borrowing money to trade, just with different speeds of risk exposure.
The focus is not on the leverage multiple, but on whether you have prepared a risk management plan.
My suggestions are:
Choose leverage wisely, matching it with your funds and trading plan;
Use isolated margin mode to segregate risk; strictly implement stop-loss and take-profit, set reasonable daily profit targets;
Avoid greed and emotional trading, smaller goals are more stable.
The most taboo operation in contracts is “holding positions,” especially in volatile markets, where a slight pullback can lead to liquidation. Once liquidated, no strong trend will matter to you.
Don’t seek to get rich overnight; steady daily profits are the ultimate way to win.
For example, with a 5,000 U capital, earning 2% daily (100 U), you can earn 2,000-3,000 U in a month, which is much more reliable than a one-time high-leverage gamble.
In summary, perpetual contracts are tools for amplifying profits, but they are also blades for amplifying losses.
Rational use is a boost; blind operations can lead to disaster. I hope you remain calm in contract trading, make rational decisions, and avoid taking detours.
