Let's talk about the leverage options for perpetual contracts: how much is reasonable?
First, let me briefly explain perpetual contracts - their biggest feature is 'perpetual'; as long as you don't get liquidated and you don't actively close your position, you can hold it indefinitely. This is a common type in today's cryptocurrency derivatives market.
So, how much leverage is appropriate when trading? Yesterday, during a discussion with a fellow trader, he mentioned that he usually uses 30x or 50x leverage. Taking Bitcoin as an example, 30x leverage requires a margin of 16 USDT, 50x requires 10 USDT, and 100x requires 5 USDT. My suggestion is: choose 100x leverage under the same market conditions.
The reason is simple: since we are using leveraged contracts, we must bear the leverage risk. The risk of 1x and 100x is essentially leverage risk, but the difference in returns is enormous. Some people think that 1x risk is low, but taking Bitcoin as an example, currently, one 1x position requires over 470 USDT. When there is no significant volatility, the transaction fees alone may lead to losses, and even if there is a profit, it is negligible. Since you choose leverage, you should maximize its use; 100x leverage can more efficiently amplify returns.
However, it's important to note that many people tend to make a mistake: using thin capital to enter contracts beyond their capacity. If the margin is too small, it can't withstand market fluctuations, and even a slight turbulence can lead to liquidation, and any subsequent profitable market will no longer concern you. Therefore, when engaging in perpetual contracts, if conditions allow, you must ensure sufficient margin; it’s better to be prepared.
The core of investing is to control risk first and then seek returns. Holding positions is a big taboo; timely stop-loss is crucial. Using the isolated margin model can further reduce risk; don’t risk your principal. You can set a small daily target; if you reach it, stop trading, making the operation much simpler.
For example, with a principal of 5000 USDT, making a profit of 50-100 USDT daily is actually not difficult. With the right methods, theoretically, you can earn 1500-3000 USDT in a month. Even if there are fluctuations in actual operations, as long as you achieve your target on 20 out of 30 days, you’ll still be overall profitable.
