Contracts can make people rich overnight, but they can also bring them to zero in an instant.

Recently, a fan came to me and shared his experience. He worked hard in a factory for half a month, saving every penny to accumulate some money. Then, after work, he eagerly deposited the money into Binance, thinking he could get rich overnight with high leverage contracts. As a result, he fell into the trap set by the market makers.

For those who are new to the cryptocurrency space, I have to give you a warning: don't jump straight into 10x, 20x, or even 100x leverage. Once you deposit your money, you could wipe it all out in one night! Those who love to open high leverage positions either have a big gambling tendency, enjoying the thrill of risking small amounts for large returns, or they are novices who don't know how to operate, lack position planning, and end up losing everything before they even understand how contracts work.

When trading contracts, position management is crucial! You need to maximize the efficiency of your capital while avoiding risks. So how do you manage your position? It's simple; you need to be flexible with your money. For example, if you want to open a position of 10,000 USDT, you can open it with 1,000 USDT at 10x leverage, or 500 USDT at 20x leverage. But remember, always set a stop-loss, between 1%-3% is fine. This way, you use 10% of your capital to aim for 100% returns, while the loss remains within your bearable range.

However, if you directly use 10,000 USDT to open a 10x or 20x position, even a slight market fluctuation can wipe you out. You have no margin for error, no principal for trial and error, and it’s easy to lose everything. At that point, your mindset will be distorted.

Therefore, using high leverage to borrow funds multiple times your own principal for speculative behavior, liquidation is common, while making money is rare. If you want to trade contracts, you need to first understand the basic knowledge, such as leverage ratios and funding rates. If you operate blindly without understanding anything, and end up getting liquidated, you can’t blame this tool for harming you. So! Newbies must plan their positions reasonably!

If you want to learn more about cryptocurrency knowledge and first-hand cutting-edge information, click on my profile to follow me. If you are a trader who can multiply your investment tenfold in a month, you are also welcome to copy my trades. I publish market analysis and recommend quality potential coins daily.