Beginner’s Practical Guide to Crypto Contracts: Must-Read for Newbies—Avoid Pitfalls Before Profits

Many beginners are highly interested in contracts, but due to a lack of understanding of the rules and missing risk control, they get schooled by the market as soon as they enter. Today, using straightforward practical logic, we'll clearly explain the essence of contracts, how to play, and key ways to avoid liquidation. Newbies can refer to this directly.

I. Core Definition of Contract Trading

Core logic: You don’t need to actually hold the asset; simply predict whether the price will go up or down to profit. Profit if your direction is right, lose if it’s wrong. The core is earning the difference in price fluctuations, not holding the asset.

1. Bullish → Go long
2. Bearish → Go short

II. Two Main Types of Contracts

1. Perpetual Contracts: No expiry date, can be held long-term, anchored to the spot price via funding rates. Long and short parties pay each other.
2. Delivery Contracts: Fixed expiry date, settled at spot price upon expiry (or physical delivery), commonly available as current quarter or next quarter contracts.

III. Basic Key Concepts (Must Know)

1. Lot Size: The smallest trading unit of a contract, value per lot varies by trading pair.
2. Leverage: Magnifies profits and losses; with 10x leverage, a 10% drop will likely cause immediate liquidation.
3. Open Position: Buy to go long (bullish), sell to go short (bearish).
4. Close Position: End the trade to lock in profit or loss, supports market/limit orders.
5. Forced Liquidation: When margin is insufficient, the system will automatically close your position to prevent your account from going negative.

IV. Key Risk Control Points for Newbies

1. Prioritize trading major coins (BTC/ETH): High cost to manipulate, more stable market, lower risk of price wicks; smaller coins are highly volatile and not recommended for beginners.
2. Focus on daytime trading (9:00-18:00): Around 3 AM is a high-risk period for liquidations, with unpredictable markets—newbies should strictly avoid this time.

V. Core Practical Advice

Contracts can make quick money, but long-term profits aren’t based on luck. The core relies on three things: directional judgment, trading discipline, and strict risk control. Beginners should first practice “not losing skills,” build a solid risk control foundation, and then gradually explore profit strategies to achieve steady progress.
$BTC