Many newcomers to the crypto space get excited when they hear about contract trading, thinking it's a quick way to double their money. But the reality is often different—most people end up paying the market "fees" because they don't understand the rules or lack risk awareness. Instead of blindly trying and failing, it's better to first get the basics right. Today, I'll explain contract trading inside and out in the most straightforward way.

**What’s the fundamental difference between spot and contract trading?**

In spot trading, you buy coins with real money and hold them in hopes of appreciation. Contract trading operates on a different logic—you don't need to actually hold any coins. You just need to judge whether the price will go up or down. If your prediction is correct, you make money; if wrong, you lose. That’s the true nature of contracts.

Want a coin to go up? Go long. Think it will drop? Go short. The core gameplay is simple and direct: you're essentially "betting" on the market's price direction, not investing.

**Perpetual vs. Delivery Contracts, which one should you choose?**

Perpetual contracts have no expiration date and can theoretically be held indefinitely. The price stays linked to the spot price through the "funding rate" mechanism—long and short sides periodically settle fees with each other, helping to maintain price stability. This is suitable for traders who want to do medium- to long-term swings or are confident about the direction of a certain coin.

Delivery contracts have constraints—they must be settled at the current spot price upon expiration, and sometimes involve actual physical delivery. You’ll see labels like quarterly or semi-annual. If you have a clear trading cycle plan or want to settle your position at a specific time, delivery contracts might be more appropriate.

**A few pitfalls you must avoid**

The number of contracts might seem insignificant, but it determines your actual exposure each time you trade. The value of contract lots varies greatly across different coins, so you need to understand this clearly.

Leverage is a double-edged sword. 10x leverage sounds like making 10 times the profit faster and more exciting. But think about it—if the price drops just 10%, your account could be liquidated immediately, losing everything. That’s the real risk of leverage.

Opening and closing positions may sound simple, but beginners often make the mistake of over-leveraging or misjudging the bottom. The market won’t wait for you to react.

**How can you survive longer?**

Instead of obsessing over whether to use leverage, ask yourself about your risk tolerance. Small traders simply can't afford leverage above 10x; 3x or 5x leverage is safer. Only risk 5-10% of your account per trade—this way, even a few losses won’t wipe you out.

Set your stop-loss and take-profit levels in advance—don’t wait until the market moves against you to regret it. Mental preparation is also crucial—contract trading is a game of probabilities. You won’t win every trade, but surviving long enough increases your chances of coming out ahead in the end.