First, throw out the keywords: spot, contract, leverage, opening position, closing position, position, liquidation price, liquidation, margin, cross margin, isolated margin. Then explain each one by one. By the end, you should understand a graceful way to put money into someone else's pocket.

Going long: bullish, buying; closing long: end of bullish, selling.

Shorting: bearish, selling; closing short: end of bearish, buying.

Spot: buy if bullish, sell if not bullish. The risk is price volatility. Spot cannot short.

Trading: for every buy, there must be a sell; for every sell, there must be a buy; only buying or only selling without the other side is an unfinished trade.

Opening position: starting the trade.

Closing position: closing the trade, ending the transaction.

Position: a transaction (can buy multiple times, sell multiple times, as long as it is not fully sold or fully bought to end the transaction).

Position size: the size of the transaction amount, measured in stablecoins or the number of coins. For example, a position of 100u or a position of 2 BTC.

Leverage: you can borrow assets from the exchange platform for trading. You can borrow u to buy coins and bet on a rise, or borrow coins to sell and bet on a decline. Suppose you have 100u, are bullish on BTC, and want to seek more profit, you can borrow 100u from the platform through leverage, thus you have 200u and buy BTC worth 200u (assuming 1 BTC costs 200u), the 200u is the initial value of the position, or the position is 2 BTC. The amount for trading is 200u, your principal is only 100u, and the total leverage is 200/100=2, meaning the risk is also twice that of the spot asset. How to understand this double risk?

You actually only have 100u, the other 100u is borrowed; the exchange won't let you owe it money. So you can only lose this 100u at most. You bought 200u of BTC, and when the BTC price drops by 50%, the 1 BTC you bought for 200u is worth only 100u now, resulting in a loss of 100u, and you can't lose any more (the principal is only 100u). The exchange's risk engine will forcibly sell this 1 BTC, convert it to 100u, to repay the borrowed money.

Liquidation price: in the example above, your opening price is 200 (the price of BTC when opened), and the price at which forced trading occurs is 100; this price at which forced trading occurs is the liquidation price (forced closing price).

Analogously, when leverage is 3, a price drop of 33.3% will result in liquidation of the position.

The drop magnitude for forced liquidation = 1/leverage size. When leverage reaches 5 times, a drop of 20% is enough to trigger liquidation.

Alternatively, you can understand it like this: out of 200u, your money only accounts for half. So if it drops by half, your money is gone. If you borrowed 9900u to open a position, your money only accounts for 1% of it, making the leverage 100. If it drops by 1%, your money is gone.

Margin: your account principal is your margin. You can add enough margin to your account, or ensure the value of the opened position does not exceed the margin amount, so there won't be a liquidation price. Suppose you have 100u, you can use 1u as margin to open 20 times leverage (equivalent to 1 times 20u), which means opening a position of 20u. At this point, there is no liquidation price because you have enough money; 20 is only your 20%, and you won't mind even if you lose it all.

Liquidation: it means your opened position is forcibly closed.

Contract: it works similarly to leverage (a type of trading method, trading tool), but it is more convenient to operate, yet can also easily lead to overlooking risks.

Cross margin: all positions share the same margin. For example, if you have one position for BTC and another for ETH, both positions use a pool of margin. When the margin in the pool is insufficient (if any position reaches the liquidation price), both positions will be liquidated simultaneously (similar to a chain reaction). When there are floating profits in one position, it can offset floating losses in another position. Hedging operations can be performed, which involves opening both long and short positions for a single currency.

Isolated margin: margins are not shared, they are independent of each other; one liquidation does not affect another position, and hedging cannot be performed.

Total leverage = total opening value of all positions / total margin.

In simple terms, the larger the total leverage, the easier it is to lose money in a short time.