In a second-tier city, there lived a young man named Xiao Li. Xiao Li comes from a poor family and has longed for wealth since he was a child. He didn't have many friends, and his life seemed lonely and boring. However, an accidental opportunity changed Xiao Li's fate. He met an old classmate, Xiao Chen, and this reunion changed Xiao Li's fate.
Xiao Chen was an early cryptocurrency enthusiast and introduced Bitcoin and Ethereum to Xiao Li. Xiao Chen told Xiao Li that the cryptocurrency market is full of opportunities, and as long as you dare to take risks, it is possible to achieve financial freedom. Xiao Li was deeply inspired and decided to give it a try. He used what little savings he had - a total of $3,000 - to buy some Bitcoin.
In 2017, the price of Bitcoin soared, from about US$1,000 at the beginning of the year to nearly US$20,000 at the end of the year. Xiao Li's investment has increased several times, and his account funds have reached 1 million US dollars. At this time, Xiao Li felt unprecedented happiness and confidence, and felt that he was not far from wealth and freedom.
Having experienced success for the first time, Xiao Li's desire for wealth became even stronger. He began to get involved in leverage trading, hoping to accumulate more wealth quickly with a small gain. Under the guidance of Xiao Chen, he began to trade high-leverage Bitcoin contracts. Initially, Xiao Li quickly made profits through leverage trading, and his account funds soon exceeded 5 million US dollars. However, he did not know enough about the risks of leveraged trading and thought that he could always go smoothly.
At the beginning of 2018, the price of Bitcoin began to decline sharply and entered a bear market. Xiao Li's highly leveraged transactions suffered heavy losses amid sharp price fluctuations. He watched the funds in his account evaporate little by little, from $5 million to less than $100,000. Xiao Li fell into deep despair and felt that all his dreams and efforts were in vain.
After experiencing this painful lesson, Xiao Li was not discouraged. Determined to stand up again, he began to learn more about trading and conduct a more in-depth analysis of market dynamics. In 2020, the price of Bitcoin rebounded again and entered a new round of bull market. This time, Xiao Li used leverage cautiously and became rich again in the bull market. His account funds once again reached $5 million.
However, as wealth accumulated again, Xiao Li's greed also expanded again. He was no longer satisfied with steady growth and began to boldly conduct high-leverage transactions in an attempt to obtain higher returns in a short period of time. In mid-2021, the Bitcoin market fluctuated again. Because Xiao Li was unable to close his position in time, he once again suffered heavy losses and ended up with nothing.
Precautions and mentality of contract trading
1. Understand contract types and leverage risks: Before conducting contract transactions, it is important to understand the risks of different types of contracts and leverage transactions. High leverage may bring high returns, but it may also bring huge losses.
2. Choose the leverage ratio carefully: Novice investors should start with low leverage and gradually become familiar with market changes to avoid excessive risks caused by high leverage.
3. Stay calm and rational: When the market fluctuates violently, it is especially important to stay calm and rational. Avoid making impulsive decisions based on short-term price changes.
4. Diversify risk: Do not invest all your funds in a single contract or transaction, reduce risk by diversifying your investments.
5. Set stop loss and take profit: Before each transaction, set stop loss and take profit points, and strictly implement the trading plan to avoid heavy losses due to violent market fluctuations.
6. Continuous learning and research: Keep learning and researching market dynamics, and constantly improve your trading skills and market analysis capabilities.
Contract trading is full of opportunities, but also comes with huge risks. Investors need to remain cautious and control risks in order to achieve steady growth in a volatile market.
