Many people say that you should not play with contracts when trading cryptocurrencies. This statement makes sense, but it cannot be generalized. Investment strategies should be formulated based on individual circumstances, rather than blindly following the advice of others. The following is a detailed analysis of this view:
Why don’t you play with contracts when trading cryptocurrencies?
1. High risk, high reward
Contract trading is essentially a highly leveraged investment with great risks. For people with limited funds, they may lose everything in a market fluctuation. For people with sufficient funds, although spot investment has lower returns, the risks are relatively small and it is more suitable for long-term stable appreciation.
2. High psychological pressure
Contract trading requires investors to have strong psychological qualities and adaptability. Every fluctuation in the market will directly affect the investor's financial situation, which can easily lead to excessive psychological pressure and affect decision-making.
3. Expertise required
Contract trading requires higher market analysis and technical analysis. Without sufficient professional knowledge and trading experience, it is difficult to make a profit in contract trading. In contrast, spot investment is easier to understand and operate.
Comparison between spot and contract
1. Investors with small amounts of capital
For investors with limited funds, if they play with BTC and ETH spot, the benefits may be very limited, so it is better to increase income through other means, such as delivering food, etc. However, this does not mean that you should blindly enter the high-risk contract market.
2. Investors with large amounts of capital
If you have 1 million in funds, playing with BTC and ETH spot is a safe choice. Large capital investment can get considerable returns when the market rises. At the same time, the risk of the spot market is relatively small and more suitable for long-term investment.
The essence of investment
Whether it is the stock market or the cryptocurrency circle, the essence of investment is the same: you must choose an investment method that suits you based on your actual situation.
1. Knowledge and experience
Investing requires the accumulation of knowledge and experience. The advice to invest in funds or buy the top ten currencies by market value is not completely unreasonable, but it depends on whether it is suitable for your specific situation. If you have very little capital, you do need to adopt a more aggressive strategy to take a chance.
2. Risks and Rewards
Poor people do not need to pay attention to the market and buy a lot of currencies every day to trade in cryptocurrencies. Instead, they need to be bold and dare to take risks. Sometimes, a gamble may bring unexpected gains, but you must understand that this method may also bring huge losses.
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