Before answering this question, let me briefly explain what perpetual contracts are. A perpetual contract, as the name suggests, is a contract with a perpetual term. In the current digital currency derivatives trading market, perpetual contracts are considered a relatively new type of contract. The meaning of a perpetual contract is that, under the premise of not being liquidated, if you do not actively close the position, you can hold this contract indefinitely. So, how much leverage is reasonable to use? Someone asked me this question yesterday, and I will address it today.
Yesterday, I talked with a crypto friend who usually uses 50x leverage or 30x leverage. For Bitcoin, 30x leverage requires 16U, 50x leverage requires 10U, and 100x requires 5U. Under the same market conditions, my personal suggestion is to only use 100x leverage. Why? Because once you open leverage in contracts, regardless of whether it is 1x or 100x, you carry leverage risk. Under the same market conditions, the profit generated by 1x leverage and the profit from 100x leverage are drastically different. Some people might say that 1x leverage has lower risk, which is true; however, for Bitcoin, if you use 1x leverage, you currently need over 470U for one contract. Without a significant price increase, you will definitely incur losses due to transaction fees, and even if there is a profit without a large price increase, it won't be substantial. What I want to express is that since you have chosen to use leveraged contracts, you should maximize the use of this leverage and only use 100x leverage.
In many cases, what happens is that with limited funds, one trades contracts that do not match their current capital. With little margin, they cannot support the current market, which might lead to liquidation during significant market fluctuations. When profitable market conditions arise later, it has nothing to do with you, and the contracts you hold become invalid. Therefore, when trading perpetual contracts, under acceptable conditions, we should appropriately prepare more margin as a precaution. Regardless of what investment we are making, there are risks involved. Our goal should be to minimize those risks and then focus on profits. Holding onto losing positions is a major taboo in contract trading; cutting losses in a timely manner is very necessary.
Timely cutting losses, combined with a position-by-position approach, minimizes risks. Do not joke with your own capital. Set a daily target for yourself; once you reach it, take your profits. Trading contracts will become very simple. Friends who have been in contact with contracts know that if you have 5000U as capital, making a profit of 50-100U daily is quite simple. Adding some methods makes it even easier. If you earn 50-100U a day, how much is that in a month? 1500--3000U! Of course, in actual operations, you may encounter significant market fluctuations or various unexpected events. Taking a conservative approach, in a month with 30 days, as long as you meet your daily target for 20 days, you will still be profitable. After saying all this, I hope it can be helpful to crypto friends.
ju
