Having been in the crypto space for many years, I have seen too many myths of overnight wealth and witnessed countless tragedies of total loss. Today, as a seasoned player who sincerely hopes everyone can progress steadily in the crypto world, I want to have a serious discussion about a key topic — high leverage.
High leverage is undoubtedly the sharpest double-edged sword in the crypto space; it brings ultra-high returns while also hiding risks that seem bottomless. Many people fail in the crypto market primarily because they play too 'aggressively' and excessively rely on high-leverage funds beyond their capacity.
For a simple example, suppose you only have 1000 yuan in capital, but you recklessly use 100 yuan to participate in a 100x leveraged trade. Instantly, the funds you can operate with seem to surge to 10,000 yuan, but 9,000 yuan of that is borrowed. In the volatile crypto market, if there is even a slight fluctuation and it exceeds 10%, your 1000 yuan in capital can vanish in an instant. It's important to know that a 10% fluctuation in the crypto space is negligible; it happens almost every day.
Contract trading is essentially just a tool; it allows you to short, which spot trading cannot do. We often see high leverage of 10x, 20x, or even 100x, but don’t forget the safest 1x leverage, which means trading only with your own capital without borrowing a dime.
The tool itself is neither right nor wrong; the key lies in how the user wields it. Just like a knife, it can be a means of self-defense in the hands of a righteous person, but it becomes a weapon in the hands of a criminal. The same principle applies to investing in the crypto space; using leverage wisely can help grow your wealth, but misusing it can lead you to a deep abyss.
If you are a newcomer to the crypto space or are interested in it but don't know where to start, feel free to follow me. As a veteran who has navigated the crypto world for many years, I am willing to share my experiences for free, helping you seize opportunities during this bull market and achieve steady wealth growth.
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