Want to play contract trading? Then you need to understand the rules first, otherwise you'll be blindly betting like a gambler in a casino. Understanding the basics of contracts is not only for survival but also to avoid the risk of 'liquidation'.

Today, let's talk about the basic concepts in contract trading that you must understand to avoid pitfalls and keep your life safe.

🧐 Fees, your invisible killer

First, clarify the costs of contract trading! Many people think the fees are just a small number, but not understanding the fee structure can lead to significant losses.

For example, if you place a market order, the opening and closing fees are 0.05%. It doesn't sound like much, but with leverage, this fee skyrockets.

For example, if you open a contract with 100x leverage, an investment of 100U incurs a fee of 10U! That means you didn't actually make a profit; instead, you lost part of it.

Remember, leverage is not a tool for you to get rich; it’s more like a double-edged sword that can wipe you out overnight.

🔥 Closing fees, the unavoidable 'harvester'

Closing fees are a very annoying existence, especially when you're about to be 'knocked down' by the market; it's like the last straw.

If you accidentally get liquidated, the losses are not just from market fluctuations but also from the closing fees of up to 1.5%! You might think that a 1% drop is all it takes, but in reality, after deducting fees and closing costs, you could be liquidated with just a 0.5% drop.

Therefore, don't wait until 'liquidation' is imminent to think about stop-loss.

👀 Mark price, don't blindly chase highs and sell lows

The concept of 'mark price' may be a bit complex, but it is actually a price fluctuation that is more stable than the current market price.

When setting a trigger price, remember to use the mark price, as this can help avoid greater impacts from short-term market fluctuations. If you want to avoid being 'harvested' by the market, you need to understand how to dance with the mark price.

⚖️ Isolated margin VS Cross margin, how should you choose?

The choice between isolated and cross margin is unclear to many people. Simply put:

  • Cross margin mode: You use all the funds in your account as margin; the larger the opening amount, the greater the risk.

  • Margin mode: Only use part of the funds during opening as margin, other funds are unaffected, relatively low risk.

Both have their pros and cons; the specific choice of which mode to use depends on your risk tolerance.

But remember, if there are open contracts in your account, you cannot switch modes at any time, so consider this carefully when operating.

🎯 Summary:
Contract trading is not a brainless tool for 'doubling' your money; it is more like entering a high-risk game. Only by understanding the cost structure, leverage risk, closing conditions, price fluctuations, and other basic rules can you survive in this game.

I remind everyone not to blindly follow trends or add leverage recklessly. The allure of contracts lies in precise strategies and risk control, not in 'getting famous in one bet'. Stay rational, set proper stop-losses, and master leverage to steadily advance in this game.