Some people will strongly advise against playing with contracts, while others say that contracts are the fastest way to accumulate original capital, so you can often see those who play spot calling those who play with contracts gambling, and those who play with contracts saying that those who play spot and shout orders are cutting leeks.
Now let's take a brief look at what a contract is. A contract is also called a perpetual contract, which is similar to a futures contract but has no delivery date. You can go long or short. For example, if you predict that a certain currency will rise, you choose to go long. When its price rises, you can make a profit, and vice versa.
Why do most people like to play contracts? There are two reasons. For example, many people say that they buy spot and wait for a bull market for one or two years. Let's say you really wait until the bull market comes and the currency you bought also increases several times. Will you be satisfied? Many small capital players will not. 10,000 times or tens of thousands of yuan, I believe that most friends do not come to the currency circle for several times the return. What's more, what if the bull market does not come? What if the currency you bought in the bull market does not increase much? This is one of the reasons why many people play contracts. Another point is that contracts can be long and short, which makes people feel a little fairer subconsciously because buying spot can only be long. The dealer has a lot of low-priced chips in his hands, which makes people feel that they will be cut sooner or later.
A contract has several elements:
Leverage: Many people will tell you that you will get liquidated sooner or later if you play contracts. In fact, the most direct reason is leverage, because leverage will stimulate and amplify the greed in human nature. The leverage can be set to 1-125 times. What is the concept of 100 times leverage? A fluctuation of 1 point can double. Therefore, many people cannot control themselves and increase leverage after a low multiple loss, so liquidation is a matter of sooner or later.
Funding rate: The anchor of a perpetual contract is the corresponding spot. In order to make the price of the contract close to the spot, the exchange will use the funding rate to adjust. If it is positive, the short position will be paid, and if it is negative, the long position will be paid. The payment cycle is generally once every 8 hours. Specific payment amount = transaction amount (purchased principal * leverage multiple) * funding rate
Handling Fee: Taking a certain An as an example, in the absence of discounts, the contract handling fee is 0.05% for one-sided orders and 0.02% for pending orders (in simple terms, taking orders means to complete orders that have been placed by others, and pending orders means to place orders in advance and wait for transactions. You can search Baidu for the specific meaning). Handling fees are charged in both directions, both for buying and selling. The specific calculation method is: transaction amount (principal * leverage multiple) * handling fee rate.
Liquidation: When the price reaches the price you forced to close your position, the platform will force you to close your position. Liquidation will charge a high handling fee, so it is recommended that you set a stop loss price (preferably with some space between the forced liquidation price) to avoid forced liquidation.
Summary: People with poor self-control, strong desire to win, strong DU nature, obsessiveness, and financial pressure should never play contracts. Otherwise, the market will teach you a painful lesson.