I have recently received many questions about what futures are, so I want to share some of my personal experiences with you.

Simply put, futures, also known as futures contracts, are a way for you to bet on the price trend you predict. If you believe the price will go up, you go Long; if you think the price will go down, you go Short. Most crypto exchanges nowadays have this feature, although not all coins are listed with futures.

The advantage of futures is that it allows you to use leverage, meaning you can borrow money to increase your trading size. For example, I have $1 but use 100x leverage, so I can trade with $100. It sounds attractive, but that’s also where the biggest risks lie.

If your prediction is wrong, losses are multiplied by the leverage ratio. When your accumulated loss reaches your initial capital, the exchange will automatically liquidate your position—that is, you will lose all your money. That’s why many futures traders end up losing their assets.

I learned this lesson from losing money when I first started trading. So I want to share the risk management methods I apply:

First, always use Stop Loss (SL) and Take Profit (TP). These are two automatic tools that help you cut losses promptly or lock in profits before losing too much. Most exchanges have these features, and you need to learn how to use them proficiently.

Second, reduce leverage. My experience is that when trading BTC, you should only use up to 5x, and for ETH and altcoins, 3x is enough. The higher the leverage, the greater the risk.

Third, split your capital into smaller parts and add to your position multiple times. Instead of putting all your money into one order, divide it into several parts to increase your ability to withstand losses and wait for better entry points.

Finally, pay attention to liquidation levels. You should set your Stop Loss so that the liquidation level is as far away as possible, avoiding being forced out by small market fluctuations.

An important thing is that understanding what futures are is less important than understanding its risks. These are just personal experiences, not investment advice. Before participating in any trading, you should educate yourself thoroughly and be mentally prepared to lose money.