Cryptocurrency Contract Beginner's Guide | Essential Knowledge from Scratch
For those new to the cryptocurrency world, are you confused about contract trading? Don't panic, today I'll educate everyone on the basic knowledge of cryptocurrency contracts, making it easy for you to get started~
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1. What is a Cryptocurrency Contract
A contract, also known as a futures contract, is referred to as FUTURE in English. In the cryptocurrency world, making a contract trade is like two people signing a contract.
Contracts are measured in units, with the smallest trading unit being one contract.
Contracts can be newly signed, for example, if you and someone else sign a new contract, the total number of contracts in the world will increase by 1. It may also be that someone transfers an existing contract to you, in which case the total number of contracts remains unchanged.
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2. The Difference Between Contracts and Spot Trading
Spot trading involves paying cash and receiving goods simultaneously, with both parties settling their accounts, while in cryptocurrency contract trading, the parties usually trade not physical goods but expectations of future prices.
For example, if someone believes Bitcoin will rise and another thinks it will fall, they can sign a contract to bet against each other. Essentially, contracts are zero-sum games, where one party's gain is the other's loss.
The biggest difference between contracts and spot trading is the ability to leverage and short-sell. Leverage is used to adjust the margin ratio, and each contract's leverage multiple is set by the exchange based on the cryptocurrency's volatility and liquidity.
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3. The Secret of Leverage
Assuming Bitcoin is currently priced at 50,000, and the margin for one contract is 50. If you open a 100x leverage position, the contract value would be 5,000. If you only have 50 in your wallet and the price drops by 1%, you would be liquidated.
But if you have 2,500 in your wallet, all of that can be used as margin, making your actual leverage 2x instead of 100x. Therefore, the size of leverage depends not only on the chosen leverage ratio but also on the funds in your wallet.
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If you're just getting into cryptocurrency contracts, be sure to operate cautiously, learn more, and understand better~ If you have any questions, feel free to leave a message, and let's discuss together.#美联储比特币储备 $BTC
