How much leverage is reasonable for contracts? Today, I will tell you the truth!

Recently, someone asked me: How much leverage is appropriate for contracts? This question is actually very crucial, especially for perpetual contracts. Today, I will break it down for everyone.

What is a perpetual contract?

Simply put, a perpetual contract has no delivery date. As long as you don't get liquidated and don't close your position voluntarily, you can hold it indefinitely. This is its biggest difference from futures, offering greater flexibility.

So how much leverage should you use?

The choice of leverage depends on your risk tolerance and market judgment ability.

1. Low leverage (1-5 times)

Suitable for conservative investors, with smaller fluctuations, limited losses, and less likelihood of liquidation. Suitable for long-term holding.

2. Medium leverage (5-10 times)

Suitable for investors with some experience, who can amplify profits while controlling risks.

3. High leverage (over 10 times)

Suitable for high-risk, high-reward speculators. While it can quickly amplify profits, the risk of liquidation is also greater. It requires precise market judgment and strong risk management skills.

The balance point of reasonable leverage

Appropriate leverage is built on the foundation of risk control. When the market is highly volatile, excessive leverage can result in instant liquidation; appropriate leverage can help you achieve steady profits.

Leverage is not always better when it is higher; rational trading is key. Beginners should start with low leverage, gradually accumulate experience, and progressively increase leverage.