1. What is contract trading?

In one sentence:

You don't need to actually hold the coins; as long as you correctly predict the direction, you can make money; if you're wrong, you'll lose.

• You think it will rise → Go long

• You think it will fall → Go short

The core is to capitalize on price fluctuations, not to hold assets.

2. The two common types of contracts

1. Perpetual contract

No expiration date, can be held indefinitely.

Prices are anchored to spot through the "funding rate" with long and short positions paying each other.

2. Delivery contract

Has a fixed expiration date and settles at the spot price upon expiration (or physical delivery).

Common types include current season and next season contracts.

3. The most important basic concepts

1. Number of contracts

The minimum trading unit of the contract. Each contract has a different value depending on the currency pair.

2. Leverage

Amplifies profits but also amplifies losses.

10x leverage means: if you drop 10%, you might get liquidated immediately.

3. Opening a position

• Buy to go long: bullish

• Sell to go short: bearish

4. Closing a position

Ends the trade to lock in profits or losses, can be at market price or limit price.

5. Forced liquidation

If the margin is insufficient, the system will automatically liquidate your position to prevent account depletion.

4. Risk control is the lifeline for beginners

1. Control leverage within 5 times

The higher the leverage, the faster the loss.

10 times will get liquidated with a 10% drop, while 5 times requires a 20% drop to get liquidated.

2. Single trade stop-loss not exceeding 3% of the principal

For example, if your principal is 100,000, the maximum loss per trade is 3,000.

If you make three consecutive mistakes, you still have 91% of your principal to continue.

3. Try to trade mainstream coins (BTC/ETH)

Manipulation costs are high, more stable with fewer spikes.

Small coins may seem exciting, but they can be deadly.

4. Try to trade during the day (9:00-18:00)

Around 3 AM is a concentrated area for liquidations, with illogical fluctuations; beginners should avoid this.

Final heartfelt words

Contracts can indeed make quick money, but whether you can make money in the long term depends not on luck, but on:

Direction + Discipline + Risk Control.

First, learn not to lose, then learn how to make money.

Start with a simulated account for practice, then use small funds for real trading.

Gambling-style trading is prohibited; those who walk this path steadily will go further.

#Crypto #Contracts