Why do some people say that trading cryptocurrencies should avoid contracts?

Contracts are not just limited to 100x and 125x options.

It can easily get liquidated. What kind of leverage is that?

In fact, high-leverage contracts are pure gambling.

Of course, if you play with a few hundred bucks, it’s not a big deal. But if you go all in on high leverage, that’s purely a suicidal behavior.

To put it simply, contracts are designed to increase your capital utilization. The cost of perpetual contracts is the funding fee, while the cost of delivery contracts is the premium. Of course, this cost can be zero or even negative. I won't elaborate on that here.$ETH

Many people do not have their own trading system and have poor risk tolerance. They lack strict trading discipline and prefer to hold onto their positions. Therefore, they feel that with spot trading, a 30% drop won’t be a problem for them, but a threefold contract might wipe them out.$BTC

This is completely wrong. Firstly, being able to bear a 30% loss indicates that you do not have strict trading discipline and are purely gambling in the market. You might claim to be a long-term trader, but long-term trading shouldn’t involve opening contracts because there are costs and increased risks.

If you have strict stop-loss measures, being able to bear the loss from a bad trade is your reason for opening contracts.#币圈

For example, if you have 100,000 and the current price of BTC is 100,500, you believe that 100,000 is an important support level and won't be breached, and if it does, you'll stop loss. The loss you can bear is 10,000, and you are willing to risk this cost, you can consider opening a 20x position, so that if it goes wrong, it’s still within your loss range. But if you don't have a stop-loss, when it drops to 95,000, you’ll be liquidated and have lost everything.#币圈暴富

So do you understand? When you open contracts, you must know what your maximum loss is and stay within your risk tolerance.#比特币

Alternatively, it can be for the purpose of increasing capital utilization, knowing that we are in a bull market where all cryptocurrencies are rising, and major corrections are not likely to occur.

To improve capital utilization, you can use leverage not exceeding 3x to allocate different cryptocurrencies. This is also reasonable.#CPI数据来袭

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