Quick Guide: The 8 Key Concepts of Crypto Trading You Must Understand

Confused between spot, contract, liquidation, and all that? Here it goes:

1. Spot (Direct purchase): Buy crypto, wait for it to rise, and sell. Profit = selling price - buying price. No debt, no complications.

2. Contracts (Derivatives): Bets on the rise (long) or fall (short) without buying the actual currency. It's like betting whether BTC goes up or down.

3. Leverage: You borrow money from the exchange to amplify gains ( and losses ). 5x = you control 5 times your capital. Higher leverage = higher profit, but also a higher risk of losing it all.

4. Long Position (Long): You are optimistic. You buy now hoping it will rise. Profit = your money × % increase × leverage.

5. Short Position (Short): You are pessimistic. You sell borrowed (money) first to buy back cheaper. Profit = your money × % decrease × leverage.

6. Liquidation (The Nightmare): The market moves against you. When your loss reaches the limit, the exchange closes your position automatically without asking. Goodbye to the collateral.

7. Bankruptcy (Total Liquidation): The market moves SO fast that you can't even close the position in time. Not only do you lose all your money, but you also end up in the red (owe money).

8. Close Position (Exit): You manually close your contract to take profits or cut losses. You control this yourself.

💡 TL;DR: Spot is playing it safe. Contracts with low leverage are training. High leverage = casino. Liquidation hurts you more than hunger. Learn to manage risk before the market teaches you for free ( and at a high cost ).

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