Many people who do contract trading do not fully understand the relationship between position size and contract multiples.

Let’s popularize these basic knowledge today. Some people will say: "I dare not open 100 times leverage, it is too easy to liquidate the position." Some people see other people using screenshots of contracts with 50 times or 100 times, and feel that this must be very dangerous, and recommend that everyone use low times leverage.

In fact, these statements are not accurate enough, because simply looking at contract multiples is meaningless. For example, I have $100 and you have $100. If I use $1 to open 100 times leverage, and you use $100 to open 5 times leverage, on the surface it looks like I am using 100 times leverage, but in fact I am safer than you. Why is this?

This has something to do with the position size. Whether it is safe or not really depends on the position size, and the calculation formula of the position size is: **Opening funds used × contract multiple**. As you can see from this formula, although my leverage is higher, my actual risk is lower because my position is smaller.

Therefore, it is unscientific to assess risks based solely on the leverage ratio. Without knowing the funds required to open an order, the size of the leverage ratio is actually meaningless. Different people have different preferences for high leverage or low leverage, but ultimately the risk depends on the position size.

At this point, you should understand, right? Regardless of the contract multiple or position size, the most important thing is to find a risk strategy that suits you. Maybe this time, you will learn something. After all, the birthday of Musk’s golden dog **Marvin** is on November 1st. Who knows whether he will publish another tweet and ignite a new market craze? ? $BTC $ETH $SHIB #SHIB20000U一个亿 #PEPE市值超越LTC #Marvin #cz判罚 #美联储11月降息预期升温