**Contract Trading**
High risk, high reward, is an investment method that requires extreme caution.
**1. The Nature of Leverage: Amplifying Fluctuations, Not Returns**
- **Double-edged Sword Effect**：Leverage amplifies price fluctuations and human weaknesses (greed/fear), with 10x leverage making 1% fluctuation equal to 10% profit or loss, and 100x leverage making 1% fluctuation potentially lead to liquidation.
- **Correct Use of Leverage**：Capture trends with minimal margin, rather than blindly over-leveraging. New traders are advised to use ≤5x, while experienced traders adjust according to market conditions.
**2. Core Logic of Contracts: Game and Probability**
- **Zero-sum Game**：Your profits come from others' losses, with dealers and institutions holding the advantage.
- **Prioritize Risk-Reward Ratio**：Single trade win rate is not important, long-term adherence to “small losses, large profits” (e.g., 1:3 risk-reward ratio).
- **Cut Losses, Let Profits Run**：Decisively stop losses when losing, move stop losses when profitable.
**3. Risk Control: The First Rule of Survival**
- **Position Management**：
- Single position ≤ 5% of total capital, total leverage ≤ 20x;
- Reserve funds for perpetual contracts to prevent spikes and funding rate losses.
- **Ironclad Rules Execution**：
- Always set stop losses when opening a position (exit on 1%~3% reverse fluctuation);
- Reject adding to positions against the trend, extract part of the profit after making a profit.
**4. Trend and Anti-humanity Operations**
- **Follow the Trend**：
- Bull markets are mainly long, bear markets are mainly short, do not guess tops and bottoms against the trend；
- Leverage used for trend breakthroughs (e.g., go long after key resistance levels);
- Multi-timeframe confirmation of direction (daily trend + hourly pullback).
- **Anti-humanity Timing**：
- Lightly buy the dip during market panic, take partial profits during greed.
**5. Psychological Game: Contracts are a Battlefield for the Mind**
- **Break the Fantasy of Quick Riches**：Long-term profits rely on discipline, not luck or predictions；
- **Accept Random Losses**：Black swan events can lead to short-term strategy failures, maintain a stable mindset；
- **Reject High-frequency Trading**：Mechanically execute strategies, avoid emotional monitoring.
**Summary：**
**“Use rules to combat human nature, use probabilities to capture trends”**
- Top traders are **risk managers**, not predictors；
- Key to Survival：**Low Leverage, High Risk-Reward Ratio, Absolute Stop Loss**；
- Final Goal：Establish a **long-term positive return system**, rather than short-term windfall.
**Reminder**：Contract trading is far more difficult than spot trading, with 90% of retail investors losing. If you cannot handle volatility and mindset, it's advisable to stay away.