Why do most people like to open contracts?
Contracts are actually no different from gambling.
Let's talk about spot first.
Suppose you only have $1,000 today, and Bitcoin is currently $30,000. You think Bitcoin is about to rise. If you buy it with $1,000, it rises to $36,000, and you make $200, because you only have $1,000, and you only make $200 when the B price doubles.
Let's talk about contracts.
Suppose you also think that Bitcoin is about to rise +20%*5, and you make $1,000 with your $1,000.
Before you start doing contracts, you must learn how to manage positions and build your own trading system.
The price of the currency has risen for a while. Suppose you think that the price will fall back in the future and you can go short, then your income will be the same as above. If it is spot, you only have one direction to buy up.
What are the advantages of contracts?
1: Small bets for big gains. Theoretically, in the field of contracts, as long as you open a high multiple, you can expand small funds countless times. Contracts improve the utilization rate of funds. In fact, veteran players will use a small part of their positions in addition to spot trading to do contracts, but you still don’t want to use a particularly high leverage unless your trading system is very mature.
2: Faster profit
If you only trade spot trading, with an average increase of 10% each time, it takes 7 times to double the principal of 10,000, but if you open a ten-fold contract and catch a single increase, the principal can be doubled.
Profit = 10,000*10*10%=10,000
So look at the direction, and use reasonable leverage to magnify the increase, and your assets will suddenly increase.
3: Hedge against the risk of falling prices
Coin contract trading can not only go long, but also go short
You hold Bitcoin for a long time and are bullish. You don’t want to clear your assets no matter what, but the bear market continues to fall. We can increase our currency standard through contract trading, and we can also make money by shorting. Many big guys will go short to hedge. Simply put, when the market falls, the chips in hand will shrink, but by shorting we can reduce the chips from the perspective of gold standard and increase the currency standard, and even make money. When you think that the currency price has ended the bear market decline and is about to rise, we can close the position and hold the spot and wait for the rise.
4: You can go long and short, which is convenient and flexible. When the market is bullish, it seems that everything you buy will rise, but once you enter a bear market, you will find that even if you buy a big pancake, you will lose money. The contract provides a flexible option. Not only can you go long, but you can also go short. Whether the market rises or falls, you can make money regardless of whether it is a bull market or a bear market.
About Risks
1: Risk of Liquidation
There is no way in the world to make money, especially to make big money and fast money. Contract trading can magnify profits. There are still many big guys who succeeded and achieved a counterattack. Although many people have liquidated, it is a game market. Your liquidation does not mean that others cannot do it. You should practice hard. Contracts can make quick money, but they also have to bear huge risks of liquidation, which is also the biggest risk.
2: Exchange Pins
The so-called pins are technical K-lines. A very thin line appears up or down. This small line in one minute will not affect the spot, but the short contract is different, because the leverage is magnified and the amplitude is also larger. 100 times as long as 1% will explode.
3: Magnified human nature
People who have played with contracts may know clearly what it is. They clearly look at the other party's direction, make trading plans, discipline, stop loss, stop profit, control positions, leverage, etc., but forget everything during the intraday trading. They don't execute the stop loss when they should, choose to hold the order, and end up with a margin call. It is also easy to get carried away with contracts, constantly magnify desires, and magnify leverage multiples. Many people find it difficult to control their own human nature and cannot abide by the trading disciplines. The result is a vicious cycle of margin calls. In fact, the biggest enemy we have to face in trading is our own human nature.
Finally, let's summarize the difference between the two
Spot VS Contract
The capital threshold for spot is high, and the capital threshold for contract is low
Spot is more suitable for conservative people, and contract is suitable for aggressive people
Spot has only one direction, and contract can go up, down, or sideways
Spot does not have the currency standard to zero, and contract has the principal to zero
Just express my opinion on the contract, don't criticize if you don't like it.
The current liquidity is poor, and the main hot money big players come in in the band, so it is more suitable for contracts, and contracts are more suitable for the current market. I am not a contract expert. I make a living by trading. Respecting market rules is my daily reminder to myself. I just want to tell you a different perspective on the contract tool. I just want to make trading a business through my own efforts. I hope everyone can build their own trading system, use trading to make money, and gain their own success.
I am not posting this to push everyone to play contracts, but just to express my opinion
It is recommended to focus on spot trading, play less contracts, and play with small space bands.
After the May holiday, I will arrange a spot trading. Long-term increase of 3-6 times. Fans who want to get on board, deduct 6 in the comment area. Let me see you.
