I see many newcomers in crypto often ask what futures are and whether they should participate. Today, I will share my experience about this type of trading.

Simply put, futures are a form of leveraged trading on exchanges. Almost all crypto exchanges offer this feature. The way it works is you predict whether the price trend will go up or down. If you forecast an increase, you Long; if you predict a decrease, you Short. Choosing the correct direction results in profit, while the wrong one leads to loss. However, I must warn that futures carry significant risks, especially for beginners without experience.

The biggest issue with futures is leverage. Most exchanges allow a maximum leverage of X100. Leverage means borrowing money to trade. For example, if you have $1, using 100x leverage means you can borrow an additional $99 to make a $100 trade. Sounds good, right? But it’s a double-edged sword. If you choose the wrong direction and incur losses that wipe out your initial capital, the exchange will liquidate your assets. At that point, you lose 100% of your original funds. Therefore, you really need to understand this type of trading thoroughly before starting.

My goal today is to share how to manage risk when trading futures. First, there are two important concepts: SL (Stop Loss) and TP (Take Profit). Exchanges already have automatic features that allow you to set these points. I recommend always using SL and TP when placing orders, as this greatly helps protect your capital.

From personal experience, I have a few principles to share with beginners who trade long and short. First, if you trade BTC, only use up to 5x leverage. Second, for ETH and other altcoins, 3x or less is reasonable. Third, diversify your capital and add in rounds to increase your ability to withstand losses. The liquidation point is also very important—try to keep it as far away as possible, otherwise you risk unexpectedly losing your assets.

Remember, this is just my personal sharing, not investment advice. Futures are powerful tools but also very dangerous if not used properly. Study thoroughly before diving into trading.