$BTC Ten Questions about Perpetual Contract Leverage: Is 100 Times Really the Optimal Solution?

In the cryptocurrency market, perpetual contracts are popular for their 'never expiring' feature. But how should one choose between 1 to 125 times leverage? This directly relates to the safety of the principal!

1. Perpetual Contracts: Coexisting Gains and Risks

Perpetual contracts are futures with no expiration date, allowing for unlimited positions. High leverage can magnify profits but also hides the risk of liquidation - behind the tempting profits of 100 times leverage is often the trap of total loss.

2. Three Major Cognitive Biases: Have You Fallen for Them?

Bias 1: The Higher the Leverage, the More You Earn

With 100 times leverage, a 1% fluctuation in Bitcoin equals a 100% gain or loss in your account; while 1 times leverage only fluctuates by 1%. High leverage may seem to offer huge profits, but the risk increases exponentially; a single day's 5% fluctuation can wipe out 100 times leverage instantly.

Bias 2: Low Leverage Must Lose Fees

Some people complain about the high margin of 1 times leverage and slow profits, but it can withstand larger fluctuations and avoid short-term liquidation. In the long run, frequent liquidations are the root of losses, not fees.