If you are a beginner just getting into cryptocurrency, curious yet apprehensive about the term "contract trading", this article will explain the core gameplay of contract trading in the simplest way possible. Just like learning the rules of a new game, we will take three steps: understand the rules, get to know the equipment, master the strategies.

1. What is contract trading?

Imagine you are betting with a friend on tomorrow's weather: if it rains, you win 100 yuan; if it’s sunny, your friend wins 100 yuan. Essentially, contract trading is such a betting agreement, but the bet is on the price trend of cryptocurrency.

Core three elements:

1. Leverage: Equivalent to an equipment enhancer in a game, using 1 yuan of principal to leverage 10 yuan, 50 yuan, or even 100 yuan of trading funds (mainstream exchanges offer 3-100x leverage)

2. Margin mechanism: Just like a rental deposit, you need to deposit initial funds as collateral (minimum $5 for USDT-based contracts)

3. Long and short directions: choose 'long' for bullish, 'short' for bearish, trading available 24 hours a day

2. 5 key operations every novice must know

1. Opening a position is like buying a ticket:

- Choose the BTC/USDT perpetual contract

- Click 'Buy Long' or 'Sell Short'

- Set leverage (it is recommended that beginners start from 5x)

2. Margin calculator:

Assuming you use 100U of principal to open a long position on BTC with 10x leverage

Actual operable amount = 100U × 10 = 1000U

When BTC rises by 1%, profit = 1000U × 1% = 10U (return rate 10%)

3. Forced liquidation red line:

If the maintenance margin rate falls below the exchange's requirement (usually 0.5%-1%), liquidation will occur

Formula: Liquidation price = Opening price × (1 ± Leverage × Maintenance margin rate)

4. Profit-taking and stop-loss settings:

It is recommended that novices set for each order:

- Stop-loss line: 2-3% of the principal

- Profit-taking line: 5-8% of the principal

5. Golden rule of position management:

- Single transaction should not exceed 5% of total funds

- Do not hold more than 3 varieties simultaneously

- Leverage and position size are inversely proportional (high leverage with low position size)

3. The pitfalls that experienced traders won't tell you

Deadly Mistake 1: The higher the leverage, the faster you earn

- Under 10x leverage, a 1% fluctuation in BTC equals a 10% fluctuation in account balance

- At 100x leverage, a 1% fluctuation directly leads to liquidation

- Real case: In 2021, LUNA plummeted, and 100x leverage players were wiped out in an hour

Deadly Mistake 2: Frequent trading can seize opportunities

- Each transaction has a fee of 0.05%-0.1%

- Trading 10 times a day can incur monthly fees as high as 15%-30%

- Data shows: 92% of users who trade more than 50 times a month incur losses

Deadly Mistake 3: Following experts' calls can make you money

- The trader may simultaneously open long and short positions

- Delayed execution leads to slippage losses

- In 2023, a certain KOL called for ETH, and followers experienced an average loss of 37%

Survival rule:

1. Practice on a demo account for 1 month before trading live

2. Prepare 3 independent accounts: 10% funds for practice / 30% main account / 60% backup

3. Record trading logs daily, annotating the decision basis for each order

Conclusion:

Contract trading is essentially a probability game; professional traders usually have a win rate of only 55%-60%. Remember this core formula: Long-term profit = (Win rate × Average profit) - (Loss rate × Average loss). During the novice stage, it's advisable to set a goal of 'controlling monthly losses within 5%'; only when you can achieve this for three consecutive months can you truly step into the door of contract trading. Always remember: the market is never short of opportunities, but lacks traders who can survive.

Old Wang only does real trading, the team still has positions, come quickly $BTC