Contract Revelation: The Truth Every Beginner Must Know!
In the crypto world, perpetual contracts are a love-hate relationship. Some people detest them, thinking they are a huge risk trap; others regard them as a magic tool for quick profit, believing they are the brave investors, while those who only deal in spot trading are seen as conservative old-timers. So, what exactly is a perpetual contract? Why do people have such polarized opinions about it?
A perpetual contract, simply put, is a contract with no expiration date, somewhat similar to futures but more flexible. You can predict whether the price of the coin will rise or fall, then buy or sell accordingly. If you guess right, you can make a profit; if you guess wrong, you will lose money.
Why do some people love trading contracts? To put it bluntly, making money in spot trading is too slow; sometimes it takes a year or two to even see a bull market. Even when a bull market arrives, the coins you hold may not rise significantly, and the returns can be very limited. On the other hand, contracts offer many more opportunities to make money, attracting quite a few people looking to get rich quickly. Additionally, contracts allow short selling, which is not possible in spot trading. In spot trading, you can only buy in anticipation of a rise, and if the market maker wants to take advantage of you, it’s too easy. But with contracts, you can trade both ways, offering investors more choices.
However, contracts are not to be taken lightly; the risks are quite high. Leverage is a major issue; it can help you earn more but can also lead to even greater losses. With even a slight market fluctuation, you might face liquidation. Also, funding rates and transaction fees must be factored into costs, which compresses profit margins.
If you have any other questions or feel helpless and confused about trading, want to learn more about crypto-related knowledge and cutting-edge information, please like and leave a message. I will patiently help you with your questions.
