There are two trading modes for cryptocurrency: one is spot trading, and the other is contract trading. Spot trading is like buying things in everyday life; you give them money, and they give you the goods. For example, if you spend 3000 yuan to buy a coin, you own that coin. You can exchange it for whatever it is currently worth.

The advantage of spot trading is that the coins you buy belong to you, regardless of whether their price goes up or down. Your coins are always yours; if they increase in price, they become more valuable, and if they decrease, they become less valuable. It’s quite simple to understand. The downside is that you can only profit if the price of the coin goes up; your earnings come from the price difference as it rises.

Contract trading, on the other hand, involves trading with a small amount of funds using leverage that can be several times or even hundreds of times the original price. Both profits and losses will increase simultaneously by this multiple. For example, if you buy 1 BTC with 10x leverage, it’s like buying 10 BTC for the trade.

Another advantage of contract trading is that it allows for two-way trading; you can buy long or short, commonly referred to as going long or going short. As long as you buy in the right direction, you can profit regardless of whether the price goes up or down. However, the risks and profits are proportional. With sufficient leverage, you could multiply your investment several times, or you could lose everything. This is the nature of profits and losses.

Therefore, it is recommended for beginners to start with spot trading. Once you are familiar with it and have figured things out, ideally with guidance from an expert, you can consider trying contract trading. A mature trader should rationally analyze the advantages and risks of various trading methods and carefully choose a trading style that suits their overall capabilities.

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