When trading contracts in the crypto space, pay attention to the following points to avoid liquidation:
Control Leverage: High leverage = high risk. It is recommended that beginners do not exceed 5x, even experienced traders should be cautious. The higher the leverage, the easier it is to get liquidated with small fluctuations.
Strict Stop Loss: Do not hold onto losing positions. If losses reach a certain percentage, you should stop loss. Fantasizing about breaking even will only lead to greater losses.
Reasonable Position Size: Contracts are different from spot trading. Do not go all-in; controlling your position size is crucial for longevity in trading.
Monitor Funding Rates: If you hold positions for a long time, pay attention to funding rates to avoid having fees eat into your profits.
Market Sentiment and Trends: Contracts are suitable for short-term trading. Opening positions against the trend can lead to losses, while following the trend can increase your win rate.
Don’t Let Emotions Control You: Losing makes you want to recover, winning makes you want to increase your position. Emotional trading is the easiest way to lose your principal. Analyze calmly and strictly follow your trading plan.
Be Aware of Liquidity: Contracts for coins with poor liquidity can have large slippage and are easy to manipulate by the market. It is advisable to choose mainstream coins with good liquidity.
Contracts are a double-edged sword; they can amplify profits but also come with significant risks. If you cannot grasp the market rhythm accurately, it is better to stick to spot trading.
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