In the crypto world, leverage is like a sharp knife: used well, it can quickly cut profits; used poorly, it can directly cut into your principal. Many beginners are envious of the 'small capital large returns' of 10x leverage without calculating the risk behind it — 1000U opening 10x and 5000U opening 2x seem to leverage 10000U, but the former dances on a wire while the latter walks on solid ground, often leading to vastly different outcomes.
1. High leverage vs low leverage: the difference is not just numbers, but life and death lines.
1. Risk resistance ability: A 1% fluctuation is a life-or-death dilemma.
1000U open 10x leverage: It's like hanging a heavy object with a thin wire; if the market moves against you by 1%, the loss is 100U (10% of margin), and a 10% movement will result in liquidation to zero. Beginners often focus on the temptation of 'earning 10% to double' but forget the fatal risk of 'losing 10% to completely exit.'
5000U open 2x leverage: It's like using two thick ropes to hang a heavy object; with the same 1% movement, a loss of 100U only accounts for 2% of the margin, and it takes a 20% movement to be liquidated. It seems like it occupies more capital, but it actually gives beginners room to make mistakes and adjust — in the crypto world, 'having room to adjust' means 'having a chance to turn around.'
2. Mentality impact: high leverage amplifies greed and fear.
With high leverage, every fluctuation of the K-line feels like beating a drum: when it rises, you want to increase your position to earn more; when it falls, you're afraid of liquidation and quickly cut losses, ultimately exhausting your principal in 'chasing highs and cutting lows.' Low leverage acts like a 'buffer' for your mindset; even with short-term losses, you can analyze trends calmly — true trading experts understand how to 'stabilize their mindset' using low leverage rather than 'gambling sprinting' with high leverage.
3. Long-term survival: low leverage is a 'protracted war,' high leverage is a 'blitzkrieg.'
1000U open 10x could double within a week, or it could be wiped out in a day; essentially, it's 'betting on size'; 5000U open 2x, though yielding slower short-term returns, can accumulate experience through multiple fluctuations and even withstand extreme market conditions. The core of profit in the crypto world is 'surviving longer,' while high leverage shortens your 'game time' from the start.
2. Five rules of contracts for beginners (90% of people face liquidation for violations).
1. First ask yourself: 'If I lose this money, can I sleep well?'
The funds invested in contracts must be 'idle money among idle money' — even if completely lost, it won't affect mortgage payments, living expenses, or parents' retirement. Using 'urgent money' for contracts is like dancing with shackles; once you incur losses, your mindset collapses, leading to fatal operations like 'borrowing money to increase positions' or 'holding positions without stop-loss.'
2. Set '2x leverage' as the ceiling for beginners.
Don't believe the nonsense that 'high leverage is the only way to make big money.' For beginners, 10x leverage = 90% liquidation rate, 5x leverage = 70% liquidation rate, 2x leverage = 30% liquidation rate. First, learn to 'survive' using 2x leverage amidst fluctuations before talking about making money — those who can survive in the crypto world for a year have already surpassed 80% of participants.
3. Stop-loss is a 'life-saving symbol,' not a 'multiple-choice question.'
The stop-loss for each trade must be set in advance (recommended not to exceed 5% of principal), executed immediately when triggered without fantasizing that 'the market will turn back.' I've seen too many people drag losses from 10% to liquidation because of the luck of 'waiting a bit more' — in the leveraged market, 'admitting mistakes in time' is more important than 'forcing yourself to be right.'
4. If you haven't made a profit in the spot market, don't touch contracts.
Contracts are a 'zero-sum game'; your profits come from others' losses, requiring far more technical analysis, trend judgment, and capital management than spot trading. If you can't distinguish Bitcoin's support and resistance levels, and haven't grasped the fluctuation patterns of mainstream coins, trading contracts is like 'giving away money.' It's recommended to spend 6 months trading spot: once you can achieve stable profits in spot, then try low leverage contracts with 10% of your funds.
5. Remember: 'By not trading contracts, you've already beaten 90% of beginners.'
The real big money in the crypto world has never been made by gambling with leverage. Bitcoin rose from 1 dollar to 60,000 dollars, and Ethereum from 1 dollar to 4,000 dollars, relying on long-term holding and trend grasping, not short-term contracts. For beginners, 'temporarily avoiding contracts' is not giving up opportunities but avoiding 'the easiest pitfalls.'
3. The core of stable profit: from 'contract speculation' to 'spot layout.'
1. Long-term in mainstream coins: Use 'position management' to navigate bull and bear markets.
Large position foundation: Allocate 60%-70% of funds to Bitcoin, Ethereum, and other mainstream coins (only do spot), as they are like 'the foundation of the crypto world'; even with short-term declines, the long-term upward logic remains.
Small position roll: Add positions when mainstream coins pull back to key moving averages (like the 20-day line, 30-day line) with 30% of funds, and reduce positions when they rise to resistance levels, thus lowering costs and increasing returns through 'buying low and selling high.'
2. Swing trading: Earn money that is 'understandable', not greedy for 'the last copper coin.'
Entry: Buy in batches at support levels on the daily chart (like the 5-day line, 10-day line), and don't chase 'extreme surges away from moving averages' — pullbacks after surges are often more violent than you think.
Exit: Gradually reduce positions at resistance levels, and at least liquidate 30% when profits exceed 50%, ensuring 'locking in profits.' Remember: in the 'roller coaster market' of crypto, those who can lock in profits are the winners.
3. Trend judgment: use 'the lifeline' to determine direction, and don't be confused by short-term noise.
Upward trend: If the 4-hour line stabilizes above the 20-day line, and each pullback does not break below, hold firmly — don't be scared off by a single-day crash, as the fluctuations caused by contract liquidations are often 'false drops.'
Downward trend: When it breaks below the 30-day line and rebounds weakly, decisively reduce positions to avoid risk — preserving principal allows you to 'have bullets to add positions' when the trend reverses.
4. Reverse thinking: 'Pick up chips' when others panic, 'take profits' when others are greedy.
When prices surge, think more about 'who is picking up the shares'; when prices plummet, consider 'whether the value of quality coins has changed.' When Bitcoin fell from 30,000 dollars to 15,000 dollars, panic sellers cut losses, while rational traders added positions — ultimately, the latter laughed last when it rebounded to 40,000 dollars.
Never go all in: even if you believe it's a 'bottom,' leave 30% of your position to handle extreme market conditions. 'Black swans' in the crypto world are more common than you think; 'leaving a hand' is essential for 'saving a life.'
4. Ultimate mindset: the essence of profit in the crypto world is 'cognition + patience.'
I've seen too many people use 10x leverage to earn 100,000 in a week, only to lose it all a month later; I've seen others use 2x leverage to gradually grow their assets tenfold over three years. Leverage is just a tool; what truly determines profits and losses is whether you understand trends, can control desires, and have the patience to 'take it slow.'
The last piece of advice for all beginners (a million-dollar experience): 'In the crypto world, those who can earn steadily all understand to 'earn money within their cognitive grasp' — avoid markets you don't understand, don't rush opportunities you're unsure of, preserve your principal, and endure until your trend arrives, and the money will naturally come.'
Don't envy those 'who got rich overnight'; look more at those 'who have lived long.' The road in the crypto world is long, and those who reach the end are never the fastest, but the steadiest.