Contract leverage is a pit that beginners fear the most. Many people accidentally fall into it, resulting not only in being 'stuck' themselves but even directly getting liquidated!

Leverage is essentially borrowing money to trade cryptocurrencies, allowing you to control a larger market with less capital. However, if used improperly, you can lose money faster than you earn it.

Today, let's talk about how to use leverage without falling into the pit.

First of all, what exactly is leverage?

In simple terms, if you have 100 dollars and use 5x leverage, you can make a 500 dollar trade.

If the market rises, you earn quickly; if the market falls, you lose quickly, taking your principal away.

You might think you are smart and can turn things around with luck, but in reality, this is just a trap. High leverage, chasing highs and selling lows, and a collapsed mindset can bring you very close to liquidation.

Therefore, the most important rule for beginners: low leverage, low position, and stop-loss!

Don’t let your momentary impulses and emotions treat your principal as a gamble.

If you want to make big money, you must first learn to protect yourself.

Do you think buying 10x leverage and going all in will make you rich?

You may not realize that leverage is meant to amplify profits, but it also amplifies risks.

Many people lose not because they chose the wrong coin, but because they traded too frequently, had too large positions, and couldn't control their mindset, waiting for liquidation.

So, the first thing you need to do is avoid frequent trading, be patient. The market rises and falls; it is cyclical, and you can't chase every wave.

Most importantly, set a stop-loss!

I've seen too many people who thought 'this coin will definitely rise', but when it doesn't, they hold a full position and end up with an empty account.

You must learn to 'survive first' before talking about making money.

Also, remember: leverage is not something you can add casually.

With high leverage, positions must be small; if the risk is high, the loss is significant.

It's best to start with 1-5x leverage, gradually familiarizing yourself with market fluctuations. Don't jump to 10x right away; it's really easy to get 'eaten' by the market.

Moreover, position control is crucial! Each trade should not exceed 5%-10% of your total capital; in case the market fluctuates, you can still have an exit strategy.

In summary, leverage is a tool, not a cure-all.

Don't blindly follow the crowd, and don't think about getting rich overnight.

Set rules for yourself, establish stop-losses, endure market fluctuations, and wait for the right opportunity to act.

In this way, you can become more stable in contract trading, and the wealth you earn will be accumulated rather than a windfall.