Perpetual Contract Analysis: A Must-Read for Beginners!
In the cryptocurrency world, perpetual contracts are a love-hate subject. Some people despise them, believing the risks are too great and that they shouldn't be touched; while others see them as a quick way to make money, thinking of themselves as brave explorers, while spot traders are seen as conservative.
So what exactly are perpetual contracts? Why is there such a big divide in opinions about them?
In simple terms, a perpetual contract is a type of contract that has no fixed delivery date. It’s somewhat similar to futures, but more flexible. You can predict the price movement of a certain cryptocurrency and then bet on it rising or falling. If your prediction is correct, you can make money; if it’s wrong, you will lose money.
Why do some people love trading contracts? Simply put, it’s for the pursuit of higher returns. Spot trading requires a long wait, potentially one or two years to see a bull market, and even then, the cryptocurrencies you hold might not increase much.
In contrast, contracts act like a fast track to making money, attracting those who want to get rich quickly. Moreover, contracts allow for short selling, which makes traders feel that it’s fairer. In spot trading, you can only bet on rising prices, and market makers might cut retail investors’ profits by buying low and selling high. But contracts can be traded in both directions, giving investors more options.
However, contracts are not to be taken lightly. Leverage is a significant issue. While leverage can amplify profits, it can also magnify losses. If the market swings too much, you may face the risk of liquidation. There are also funding rates and transaction fees, which can reduce your profit margin.
So if you have poor self-control, a strong competitive spirit, enjoy gambling, or face financial pressure, you should be cautious when trading perpetual contracts. You might overtrade or increase leverage due to uncontrollable trading desires, ultimately leading to financial ruin.
Recently, I plan to scout for a potential coin that is ready to explode, doubling my investment seems quite easy, and I also plan to find some potential coins to hold until the end of the year, expecting a return of over 10 times is definitely possible, but spots are limited! If you want to follow along, please like and comment.
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