I. Spot trading: Immediate delivery of physical assets Core definition: Spot refers to physical assets that can be delivered immediately after a transaction, covering commodities, stocks, cryptocurrencies, etc., in the financial field.
Trading logic:
Taking BTC as an example, buy in full at the current price of $10,000, hold and sell when the price rises to $11,000 for a profit of $1,000; if it drops to $9,000, a loss of $1,000. Characteristics: Ownership directly belongs to the user, profit potential depends on the price increase, no leverage.

II. Contract trading: The game of long and short leveraged

1. Leverage mechanism: Core principle of leveraging small to gain large: Obtain trading rights to larger assets through margin. For example, BTC's current price is $9,000, with 100 times leverage, only $90 margin is needed to trade 1 BTC.

Key formula:
Margin = Asset Price × Trading Quantity / Leverage Multiple

2. Nature of contracts: Time game of trading rights Pay margin to obtain the trading rights to the rise and fall of the underlying asset, sell for profit when the price rises, incur losses deducted from the margin when it falls; when losses exceed the margin threshold (such as maintenance margin rate), liquidation will be triggered, and funds will be wiped out.

III. Core differences between contracts and spot trading Spot trading Contract trading Trading direction can only go long (bullish) Both long and short (can trade both rises and falls) Capital occupation Full payment for asset value only requires margin payment (leverage amplification) Risk characteristics Loss limit is the cost of holding, may cause excess loss due to liquidation Profit potential is limited to absolute price increase, leveraged profit and loss can reach several times to hundreds of times.

IV. Why choose contract trading? Flexible risk hedging:
When BTC peaks at $10,000, spot holders can only passively endure the pullback; contracts can short with 100 times leverage, trading 1 BTC with a $10,000 margin, if the price drops to $9,000, the profit is:
(10000-9000)×100=$100,000, yielding a return of 1000%.

Capital efficiency optimization:
Spot requires full payment to buy 1 BTC ($10,000), while contracts only require $100 margin to achieve the same volatility profit, and the remaining funds can be flexibly allocated to other assets.

V. The truth about contract risks: Leverage is not a monster, the root of risk lies in position: a full position in spot drops by 10% results in a 10% loss, while a full position in contracts dropping by 10% may trigger liquidation;

If both use 20% position, the contract risk is comparable to spot, but can be traded in both directions. Misunderstanding of leverage and risk: Trading 1 BTC with 100 times leverage, $90 margin, price fluctuation of $1 results in a profit or loss of $1;

20 times leverage trading 1 BTC, margin $450, profit and loss is also $1 / point of fluctuation.


Conclusion: Profit and loss are only related to the trading quantity, the size of leverage only affects margin usage, and reasonable position management is the core of risk control.

VI. Beginner's guide Basic understanding: Contract and spot trends are consistent, first cultivate trend judgment ability through spot; Simulation training: Use the exchange's simulation platform to familiarize with long and short operations, margin calculation, and liquidation mechanism;

Position principle: Single trade margin shall not exceed 5% of the total account balance, prohibiting anti-single margin replenishment;

Mindset development: Contracts amplify not only profits but also test human nature, strictly enforce take-profit and stop-loss.


Risk warning: Contract trading is suitable for investors with risk tolerance, must enter after fully understanding the rules, the core of any investment is 'monetization of cognition.'
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