Holding spot during a bull market usually has more advantages than opening contracts, mainly because the overall trend is upwards in a bull market, and spot trading can better seize the long-term rising dividends of the market, while the high risks of contract trading may actually weaken investment returns.
Moreover, even if you think a bull market is just going up, opening a bullish contract may lead to liquidation if the price briefly retraces, especially under high leverage; even a slight correction can force a liquidation, causing investors to miss subsequent market recovery opportunities.
For most beginners or investors with lower risk tolerance, spot trading in a bull market is definitely a more stable choice.
If you must play contracts, at least read this before touching them, it might help you survive three more years! — A 'Survival Operations Manual' is attached at the end.
Why do some people make 1 million a day with contracts while others go bankrupt?
I. What exactly is a contract? 'Leverage chips' on the gambling table!
Simple Explanation:
Contracts are 'gambling games that amplify profits and risks with leverage'.
Spot trading: Spending 100 yuan to buy a coin worth 100 yuan, earning 10 yuan when it rises by 10%, losing 10 yuan when it falls by 10% (similar to buying groceries, payment and delivery happen simultaneously).
Contract trading: Spending 100 yuan to open a 10x leverage position is equivalent to borrowing 900 yuan, totaling 1,000 yuan for buying coins, earning 100 yuan when it rises by 10% (10 times return), losing 100 yuan when it falls by 10% (principal goes to zero, may even owe money).
Casino Analogy:
Spot trading is 'betting 10 yuan on big or small', while contracts are 'betting 10 yuan on big or small, but the casino allows you to say 'I will use this 10 yuan as 100 yuan', if you win, you earn 100 yuan; if you lose, not only do you lose the 10 yuan, but you also owe the casino 90 yuan.
II. The Fatal Temptation of Contracts: The 'Devil's Trade' of making 10x in 10 minutes!
Get Rich Quick Cases (real but extreme):
In 2025, BTC plummeted by 20%, and a player opened a 20x short position with 5,000 USDT (betting on a drop), closing 10 minutes later, earning 100,000 USDT (5,000 × 20 × 20%).
A certain MEME coin surged by 500% upon launch, and a leveraged player made 500,000 USDT from 1,000 USDT, achieving 'financial freedom' directly.
Retail Psychological Traps:
'Making 10% on spot takes a week, while making 10% on contracts only takes 10 minutes, why not play?'
Truth: It's like a 'Fast 3' in a casino; winnings come quickly, but losses come even quicker — 90% of contract players do not survive beyond 3 months.
III. The Slaughterhouse Logic of Contracts: How do dealers harvest from retail investors?
Strategy 1: Spike Market
(False breakouts that explode long and short positions)
The dealer pushes the price to 100,000 USDT, triggering retail investors to chase and go long, then suddenly crashing to 80,000 USDT, all long positions get liquidated, then it pulls back to 90,000 USDT, harvesting both longs and shorts.
Case Study:In 2024, a certain platform's BTC 'spike' plummeted by 30%, causing a 2 billion USD liquidation across the network, with retail investors crying, 'I was seen through by the dealer.'
Strategy 2: High Leverage + Low Liquidity
(Slowly boiling frogs)
Small exchanges offering 100x leverage attract retail investors with 'high returns', then after pumping a niche coin (like a certain low-quality coin), they dump it. Retail investors want to close their positions but cannot due to poor liquidity, leading to direct liquidation.
Strategy 3: Emotional Harvesting
(Pulling the plug during a crash, lagging during a surge)
During major market movements, exchanges may intentionally crash, preventing retail investors from stopping losses, as they watch their assets go to zero (during a liquidation wave on a certain exchange in 2023, users complained 'the page was loading for 1 hour').
IV. Must-See for Retail Investors: 3 Iron Laws for Survival in Contracts!
1. Leverage not exceeding 5x: The lower the leverage, the longer you survive!
10x leverage: A 10% drop leads to liquidation (e.g., 1,000 USDT principal, opening a 10x leverage to buy 10,000 USDT worth of coins, loses 1,000 USDT when it drops 10%, principal gone);
5x leverage: A 20% drop leads to liquidation (in the same situation, liquidation occurs at a 20% drop, leaving you more room to stop loss).
Motto:'10x leverage is a drug, 5x leverage is alcohol, 2x leverage is a drink' — beginners should start practicing with 2x leverage!
2. Single stop loss not exceeding 3% of principal: you can survive three mistakes!
Example: 100,000 USDT principal, each position's stop loss not exceeding 3,000 USDT (3%), if wrong three times, losing 9,000 USDT (9%), still have 91% principal to recover.
Counterexample: A certain retail investor has a stop loss of 10% per position, losing 20% for two mistakes, and liquidates on the third mistake.
3. Only trade mainstream coins + daytime trading: Stay away from the midnight reaper!
Mainstream coins (BTC/ETH): The cost of manipulation by dealers is high, making spikes less likely.
Daytime trading (9:00-18:00): Avoid the midnight 3 AM 'liquidation peak period' (dealers love to act at night).
V. The Ultimate Awakening Guide for Contract Players: These 3 types of people are destined to make money!
1. Quantitative robot operators
Automatically track trends with a program, set '5% profit taking, 3% stop loss', to avoid emotional trading (actual annual returns of 20%-50%, but must understand programming).
2. Hedging and Risk Management
Spot holding of 1 million USDT BTC, opening a 500,000 USDT short position for hedging; when the price drops by 10%, the spot loses 100,000, while the short position gains 50,000, reducing the loss.
3. Extreme Market Catcher
Only take action during 'Black Swan events' (such as sudden policy changes or exchange collapses), using 1% of your funds to bet on a crash/rise, and run as soon as you profit (only do this 3-5 times a year).
VI. Final Advice for Beginners: Contracts are not ATM machines; they are 'wealth redistribution devices'!
99% of people should stay away from contracts: If you are a worker, a stay-at-home parent, or a student, using spot investments to gradually accumulate is more reliable.
Can't resist playing? First do 3 things:
❶ Practice with a demo account for 3 months, recording the mindset changes for each trade;
❷ Set aside funds 'that won't affect your life' (like 1,000 yuan), only use 2x leverage;
❸ Write a 'trading diary' every day after the market closes, analyzing the reasons for profits and losses.
Here's another truth for you:
'Those who make big money in the crypto world rely 90% on holding spot through bull and bear cycles and 10% on contracts to scrape by. If you're not a genius trader, don't challenge probabilities with your principal — after all, casinos always make money from 'probability money', while retail investors are always betting on 'low probability miracles.'
I have the patience to summarize my insights; the most important aspect of trading is a good mindset, technical skills come second.
1. In most cases, Bitcoin is the leader in the ups and downs of the crypto market; Ethereum can sometimes break away from Bitcoin's influence to create a unilateral market, while altcoins generally cannot escape its impact.
2. Bitcoin and USDT move in opposite directions; if you notice USDT rising, be cautious of Bitcoin falling; when Bitcoin rises is the right time to buy USDT.
3. Spikes are likely to occur between 0:00-1:00; therefore, domestic traders might set low buy orders for their desired coins and high sell orders right before sleeping, and maybe they'll get filled while they rest.
4. The time between 6-8 AM is a judgment point for buying or selling, as well as for judging the day's rise or fall. If it has been falling from 0 to 6 AM, and continues to fall during this period, it is a buying or averaging opportunity, and it is likely to rise that day. Conversely, if it has been rising from 0 to 6 AM and continues to rise, it is a selling opportunity, and it is very likely to fall that day.
5. 5 PM is an important time point according to rumors in the community; due to time zone differences, American traders wake up and start working, which may cause price fluctuations, and indeed, some significant rises or drops have occurred around this time, so pay special attention.
6. There is a saying in the crypto circle about 'Black Friday', and there have been several instances of significant drops coinciding with Fridays, but there have also been cases of significant rises or sideways movements; it’s not particularly accurate, just pay attention to news.
7. If a coin with a certain trading volume guarantee drops, don’t worry; hold on patiently and you will definitely break even, in as short as 3 or 4 days, or as long as a month. If you have extra USDT, average down in batches to pull the price down; breaking even will be quicker. If you have no extra money, just wait; it won't let you down, unless you really bought a low-quality coin.
8. Holding the same coin for long-term spot trading yields greater returns than frequent trading; it all depends on whether you have the patience to hold. I bought Dogecoin at 0.1 and have held it to now, which has multiplied by over 20 times.
