In the cryptocurrency contract trading world, the most basic knowledge is:
Never open a full position; opening a margin position is the way to go!
Why?
A margin position allows you to flexibly adjust your margin and liquidation price, giving you a little more control over risk.
Think about it, with the same 10x leverage, the liquidation price is clearer with a margin position, and you can adjust your positions in batches, so you won't ruin everything with one misstep.
Here's a simple example:
Suppose a certain coin is currently priced at 100 USDT,
If you use 10x leverage, the liquidation price can fluctuate in the range of 90 to 110 USDT;
With 20x leverage, the liquidation price shrinks to a range of 95 to 105 USDT;
With 2x leverage, the liquidation price is in the range of 50 USDT up and down, which means you have more space and are less likely to be liquidated.
In fact, spot trading is 1x leverage; if it drops to zero, you lose 100 USDT, which is equivalent to a 1x liquidation in contracts.
The leverage multiplier isn’t fixed; what’s important is to adjust flexibly and follow the market trends.
If you are doing intraday trading, you can use relatively larger leverage, calculated based on the price difference between the highest and lowest in recent days.
If the market fluctuates by thousands of points, and you set your leverage reasonably, your liquidation price will be safely far from you.
For medium to long-term trading, with extended timeframes, market volatility is larger and more uncertain, so you should use less leverage to give yourself more buffer space.
Different coins have different situations, and leverage also varies.
Popular coins can fluctuate by 30% in 24 hours.
If you stubbornly use 20x leverage, isn't liquidation just a matter of time?
This detail is something many beginners don’t understand; simply using high multiples can lead to significant losses.
So don’t just focus on the indicators; the market changes frequently.
Leverage should follow market conditions and time cycles.
Understanding how to calculate the liquidation price and adjust positions is key.
I am Xiao O, a professional analyst and teacher, a mentor and friend on your investment journey! As an analyst, the most basic thing is to help everyone make money. I will help you solve confusion and position locking, and speak with strength. When you lose your way and don’t know what to do, follow Xiao O to find your direction.
