What’s going on with perpetual contracts in the crypto world?
Some say never touch contracts, while others say contracts are a good way to make quick money. As a result, spot traders criticize contract traders as gamblers, and contract traders say spot traders only know how to harvest the leeks.
Today, let’s talk about what this contract really is. A perpetual contract is like a futures contract, but it has no expiration date; you can buy and sell at any time. If you think a certain coin will rise, you buy long; if it rises, you profit; if you think it will fall, you buy short; if it falls, you also profit.
Why do so many people love contracts? There are two reasons. One is that if you hold spot for a year or two waiting for a bull market, even if the bull market comes and the coin price multiplies, small investors might not be satisfied. Turning ten thousand into several tens of thousands, what’s the big deal? Who comes to the crypto world not to make big money? Furthermore, when will the bull market come? Will the coins you buy rise? All are unknowns. So, many people choose contracts.
The other reason is that contracts allow you to buy both long and short, which feels fairer. Spot trading can only buy long, and if the big players hold a lot of low-priced chips, it makes people anxious, always feeling like they will be harvested sooner or later.
Key points:
Leverage: Why is it easy to get liquidated in contracts? Because of leverage! Leverage can amplify a person’s greed, up to 125 times. 100x leverage means that with a slight price movement, you can double your investment. Therefore, many people can't help but increase leverage during a pullback, and the result is...
Funding Rate: The perpetual contract must match the price of the spot; if not, you need to adjust using the funding rate. Who pays whom depends on the positive or negative rates, calculated every 8 hours. Transaction volume (principal × leverage) × rate.
Transaction Fees: For example, on a certain exchange, if there are no discounts, the taker fee is 0.0005, and the maker fee is 0.0002. Both buying and selling are charged, calculated as (principal × leverage) × fee rate.
Liquidation: If the price falls to your set forced liquidation line, the platform will liquidate you. Liquidation also incurs additional fees, so set a stop-loss price for yourself, leave some room, and don’t get liquidated by a spike.
If you have poor self-control, a strong competitive spirit, love to gamble, and easily get carried away, you’d better not touch contracts; the market is not a joke.
If you keep missing the right timing and feel confused about how to operate, and want to learn while keeping up, you must meet one condition: you need to have strong initiative, take action immediately, like + leave a message, and I’ll help you make big money!
