What is the contract really about?

Before playing a game, you need to fully understand the rules of the game in order to survive in it. Remember, this is a basic requirement for survival, not a secret to victory.

I have found that many students directly open contracts with 50x or 100x leverage without understanding even the most basic fee rules, which is very irrational, although I started playing that way too. But this is essentially no different from going to Macau.

Here are the basic concepts involved in contracts: (I assume everyone is an ordinary user, and the cost calculations use BNB discounts)

1. Transaction Fee: If you place a market order, the opening and closing of the position incurs a transaction fee of 0.05%, so entering and exiting costs 0.1%. It sounds small, right? But please pay attention to your leverage. If it’s 20x leverage, then the fee becomes 2%. If it’s 100x leverage, then the fee becomes 10%. This means that for a 100U contract at 100x leverage, you will incur nearly 10U in fees.

Please remember: The leverage of the contract is not meant for you to get rich overnight, but to potentially lose everything overnight.

2. Closing Fee: 1.5%, this does not mean that if you open a long position with 100U at 100x leverage, it will only close when it drops by 1%. After deducting the transaction fees and the closing fee, plus the isolated margin mode, a 0.5% drop could potentially liquidate you.

Once again, remember: at any time, do not let the system force close your position, even setting a stop-loss just slightly above the forced liquidation is better than a forced closing by the system. (Although I also do not recommend setting such a low stop-loss line)

3. Mark Price: The calculation of the mark price is somewhat complex, but you can understand it as a smoother price fluctuation than the latest price.

Recommendation: When setting any trigger prices, use the mark price.

4. Isolated Margin & Cross Margin:

Cross margin uses all the funds in your contract account as margin, regardless of how much you open a position for.

Isolated margin only uses part of the funds at the time of opening a position as margin, while other funds in the contract account remain unaffected.

Both modes have their pros and cons, switch according to the actual situation, and you cannot switch if there are outstanding contracts in your account; you must close all trades before switching.

At this point, you have just touched the doorknob to the world of contracts.

Everyone is welcome to communicate and encourage each other, and feel free to point out any areas of concern.