Contract trading in the cryptocurrency market is a flexible derivative investment method, but it also comes with certain risks. Understanding its advantages helps investors participate rationally.
Advantages
1. High Leverage
Contract trading allows investors to control larger positions with smaller capital, amplifying potential gains through leverage.
Example: With 10x leverage, investing 100 USDT can control a position of 1000 USDT. If the market moves as expected, profits are amplified according to the position size.
Benefit: Improves capital efficiency, allowing small amounts of capital to participate in larger trades and increase potential profit.
Note: Leverage also amplifies losses, so position and risk management should be cautious.
2. Flexibility (Long & Short)
Investors can choose to go long (bullish) or short (bearish), responding flexibly to rising or falling market trends.
Benefit: Profits can be made even when the market declines, not limited to one-way trends.
3. Risk Hedging
Investors can use contracts to hedge the price volatility of spot assets, locking in future prices or returns.
4. High Liquidity
Major contract markets are usually active, with convenient and fast trading, making opening and closing positions easy.
5. Flexible Operations & Short-term Opportunities
Contract trading supports short-term speculation and strategic trading, suitable for capturing short-term market movements.