Contract trading allows traders to go long or short and use leverage to amplify profits. However, leverage is a double-edged sword, and improper use can lead to liquidation.
Leverage Basics
Leverage multiple = Position value / Margin. 10x leverage means you can hold a $10,000 position with $1,000 in margin. Both profits and losses are amplified 10 times.
Leverage Selection Advice
Beginners are advised to start with 2-3x leverage. Experienced traders may use 5-10x, but leverage exceeding 20x is extremely risky and not recommended.
Capital Management
Setting stop-losses is an iron rule of contract trading. It is recommended that the maximum loss per trade does not exceed 2% of total capital. At the same time, maintain sufficient margin to cope with price fluctuations.
Common Indicators
RSI (Relative Strength Index), Bollinger Bands, and trading volume are the most commonly used technical indicators in contract trading. Using them in combination can improve trading win rates.
Investing involves risk; enter the market with caution. This article is for reference only and does not constitute investment advice.
Bitcoin has moved sharply lately, so the upside and the risk need to be measured together.
Checking network fees and platform rules before a transfer is especially important for beginners.