What exactly is a contract?
Many newcomers to the cryptocurrency world often hear a term - 'contract', also known as perpetual contract. So what is it exactly?
To put it simply: it's gambling with leverage.
In the crypto world, the market is already very volatile, with fluctuations of 10%-20% in a single day.
But contracts allow you to use several times, dozens of times, or even 100 times leverage, meaning you can control a position worth 10,000 or more with just 100.
Sounds great, right? If the price goes up by 1%, you could make a 100% profit.
But don't forget, if the market moves against you by 1%, you could be liquidated and lose everything.
Many people in the cryptocurrency space have entered under the temptation of 'high returns + high risk'.
Why do so many people continue to play with contracts despite knowing the dangers?
Because:
They have already lost too much, and after a significant drop in spot trading, they can only rely on leverage to try to recover their losses;
Their capital is too small, with only a few hundred or thousand, making it hard to make significant gains in spot trading, but leverage can amplify their position rapidly;
They see others getting rich overnight and want to duplicate that luck, fantasizing that 'next time it will be me';
The market is too boring, especially in a bear market, and only contracts can provide the thrill of short-term excitement.