Contract trading in the cryptocurrency market, a must-read for beginners!
Many friends are interested in contract trading in the cryptocurrency market, but don’t know how to get started. Today, I will outline the core knowledge and practical tips for contract trading, which beginners can bookmark!
1. What is contract trading?
Contract trading is essentially buying and selling digital currencies at an agreed price at a future point in time. You don’t need to actually hold the coins; as long as you judge the price direction correctly, you can profit.
👉 Open a long position if you are bullish, and open a short position if you think it will drop.
2. Types of contracts
Perpetual contracts: There is no expiration date, and the price is anchored by funding rates and spot prices, with funding rates settled every 8 hours.
Delivery contracts: Have a fixed expiration date, settling at expiration either at spot prices or through physical delivery. Common types include current season and next season contracts.
3. Core concepts and operations
Contract size: The minimum trading unit; different contracts correspond to different values.
Leverage: Using small capital to control large capital. With 10x leverage, 1000 yuan can operate a contract worth 10,000 yuan, but the risk also increases proportionally.
Opening a position: Divided into buying to open long (bullish) and selling to open short (bearish).
Closing a position: Ending the contract to lock in profits or losses, with options for market price or limit price.
Forced liquidation: When the margin is insufficient, the system will force liquidation to prevent further losses.
4. Key points for risk control
Reasonable leverage: It is recommended for beginners to keep it ≤5x to reduce the risk of liquidation.
Set stop-loss: Control single trade losses within 3% of the principal.
Choose mainstream coins: Such as BTC and ETH, whose price fluctuations are relatively healthier.
Be mindful of timing: Avoid the “liquidation peak” around 3 AM, and try to trade during daytime hours.
Contract trading can yield high returns, but the risks are equally significant. Beginners must first learn, practice with simulation accounts extensively, and then use small funds for real trades. Investing is not gambling; controlling positions is the key to long-term survival.
