The Essence of Contract Trading
Contract trading is a form of financial derivative trading that allows investors to profit or incur losses by predicting the future trends of asset prices. For some people, contract trading is akin to online gambling due to its characteristics of high leverage, high risk, and high returns.
Risks and Rewards of Contract Trading
In the contract market, investors can make large trades with a small amount of capital. For example, with a hundred times leverage, if the price rises by one point, you can earn ten thousand; if it rises by ten points, you can earn one hundred thousand. However, this also means that if the direction is wrong, it could lead to total loss of capital. Therefore, contract trading requires careful consideration.
The Income of Ordinary People and Contract Trading
Compared to the monthly salary of ordinary people, contract trading offers a possibility of rapid wealth accumulation. However, this possibility comes with high risk. In a volatile cryptocurrency market, extreme conditions can lead to a price increase of one or two percentage points in a second; if you're lucky, you could earn a month's salary in just a second. However, this also means you could lose a substantial amount of money in a short time.
Strategies for Contract Trading
To avoid becoming a gambler, investors need to have their own trading system, including when to buy, when to sell, what to buy, and how to buy. Additionally, they need to be prepared to deal with mistakes; when the market moves contrary to expectations, they should have corresponding measures in place. Establishing this system requires continuous learning, practice, reflection, and adjustment.
Methods to Avoid Liquidation
To avoid liquidation, strict position management is key. When leverage is high, position size should be low, and vice versa. Do not be overly reactive to market fluctuations, nor let the ups and downs dictate your actions. Safeguard your finances to avoid exposing yourself to risk. Remember, as long as the green mountains remain, there’s no fear of firewood running out; position management can make your investments safer and more composed.