Should I play contracts with small capital and low magnification ratio, or with large capital and low magnification ratio?

Anyone who often does contracts knows that you cannot choose large funds and high multiples.

Because you can succeed countless times, but as long as you fail once,

will be expelled from the market, and there will be no chance of a comeback.

What you have to do in the financial market is not to live better than others, but to live longer than others.

So we have two options, one is small capital and low multiples,

The other is large funds with low multiples.

My suggestion is to use a large amount of money to play contracts with a small multiple.

If the initial capital is 100,000 yuan, adopt the strategy of large funds and low leverage, that is, divide the funds into 10 parts, each part is 10,000 yuan, and use lower leverage (2-5 times) to trade.

1. Risk diversification

Spreading the funds into 10 operations, with only 10% of the total funds being traded each time, will help control the risk of a single transaction and reduce the possibility of liquidation. Even with high leverage, losses will not result in the loss of all funds.

2. High capital utilization rate

Large funds and low leverage can make full use of the funds in hand. With a capital of 10,000 yuan, using 5 times leverage is equivalent to a transaction size of 50,000 yuan.

3. Strong retracement control ability

Under the large capital and low leverage mode, even if there is a large retracement, there will still be enough funds to continue trading, and the chance of recovering profits will be greater.

4. The compound interest effect is obvious

Through repeated small wins and big wins, the compound interest effect can gradually amplify returns. This is easier to achieve in a large-capital, low-leverage model.

5. Less psychological burden

When operating low leverage, your psychological endurance will be better and your decision-making will be more decisive, which is conducive to obtaining stable returns.

Of course, there is some truth to using a small capital and high leverage strategy, but I still don’t recommend this approach. The reasons are as follows:

1. The risk of a single transaction is too high

Although the amount of each bet is small, high leverage magnifies the risk. Once there are continuous losses, small funds may be quickly exhausted. Under the large capital and low leverage model, even if there is a short-term loss, there will be more capital as a buffer.

2. High operating costs

In the small-capital high-leverage mode, in order to achieve a position size equivalent to that of the large-capital mode, more transactions are required. An increase in the number of transactions will inevitably increase costs such as handling fees.

3. High psychological pressure

The returns from high-leverage trading fluctuate greatly, which requires traders to have high psychological endurance. Once continuous losses occur, it is easy to affect operational judgment.#BTC #wld #sol