In contract trading, choosing the right trading currency is one of the keys to success. Here are some basic principles and methods for choosing a currency:

1. Market Liquidity

  • High liquidity: Choose currencies with large trading volume and high liquidity to ensure small price slippage when buying and selling, making it easy to enter and exit the market.

  • Low liquidity risk: Avoid currencies with small trading volumes and sharp fluctuations. Such currencies may cause trading difficulties and sharp price fluctuations due to insufficient liquidity.

2. Market capitalization and stability

  • High-market-cap coins: Choose coins with high market capitalization and strong stability, such as Bitcoin (BTC) and Ethereum (ETH). These coins usually have relatively low volatility and high market attention.

  • Risks of low-market-cap coins: Although coins with lower market capitalization may have greater growth potential, they are also accompanied by higher risks and uncertainties.

3. Volatility

  • Moderate volatility: Choose a currency with moderate volatility. A currency with too low volatility is unlikely to bring ideal returns, while a currency with too high volatility is too risky.

  • Historical volatility analysis: By analyzing historical price fluctuations, select those currencies that fluctuate within a certain range and follow a regular pattern.

4. Fundamental analysis

  • Project background: Understand the fundamental information behind the currency, such as the project team, technical strength, development prospects, etc., and choose those currencies with practical applications and long-term development potential.

  • Community support: Observe the community activity, developer support, and user base of the currency, and choose those with strong communities and active developers.

5. Technical Analysis

  • Technical indicators: Use technical analysis tools such as moving averages, relative strength index (RSI), Bollinger Bands, etc. to determine the price trend and market sentiment of the currency.

  • Price chart: Analyze the price chart of the currency, find key technical points such as trends, support and resistance levels, and help determine the timing of buying and selling.

6. Market hot spots and news

  • News and event-driven: Pay attention to news and events related to the currency, such as project progress, partnerships, regulations and policies, etc. These factors often affect the short-term price trend of the currency.

  • Market sentiment: Observe the overall sentiment and hot spots of the market and choose those currencies that are widely watched and discussed, which may have greater trading opportunities.

7. Risk Management

  • Diversify your investments: Avoid investing all your money in a single currency and diversify your investments to reduce risk.

  • Stop loss and take profit: Set reasonable stop loss and take profit levels to control risks and ensure that funds are protected and profits are locked in when the market fluctuates.

Common contract trading currencies

  • Bitcoin (BTC): High liquidity, large market capitalization, high market attention, suitable for most traders.

  • Ethereum (ETH): As the representative currency of the smart contract platform, it has moderate volatility and is widely used in the market.

  • Ripple (XRP): A representative currency used for cross-border payments, with high market volatility.

  • Litecoin (LTC): has high market recognition and moderate volatility.

  • Binance Coin (BNB)：As the platform currency of Binance Exchange, it is supported by the exchange and has a certain market stability.


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