Want to avoid pitfalls in the crypto world? First, think this through.

The most basic operation is spot trading—using USDT or fiat currency to buy directly. Once purchased, the assets are credited immediately, and there’s no risk of liquidation. It sounds very safe, but don’t get confused: if the market halves in value, you’ll still lose everything just as quickly. The only difference is that the process of losing everything to zero doesn’t happen instantly.

The real watershed is in derivatives trading.

Derivatives are not some advanced technology; frankly, it’s a contest of discipline and probability. Using 5x, 10x, or 20x leverage may seem tempting, but here’s the reality: with 20x leverage, if the price drops just 5%, your account is wiped out completely. This is not alarmist talk; it’s pure mathematics.

Now, here’s the key—U-based and coin-based contracts. This is the first thing all derivatives traders must understand clearly.

How to trade U-based contracts? Profits and losses are settled in USDT, which is stable, easy to control, and risk can be calculated. It’s the most comfortable for beginners and can be used even in a bear market. When the market is uncertain, start practicing with U-based contracts to get a feel for the rhythm.

Coin-based contracts are different. They settle in the coin itself. During a bull market, you earn coins while the price rises, and your gains multiply—such a thrill is indeed tempting. But what about a bear market? When the coin drops, the margin drops too, and losses double the pain.

So, what’s the approach? Start with U-based contracts, small positions to practice. Don’t touch high leverage, and definitely don’t treat contracts as an ATM. Once you truly understand the trend, then consider the high-profit logic of coin-based contracts.

Most people lose money for one reason: they don’t understand the market, lack direction, and their own cognition is still fuzzy. At this point, reckless operations are just burning money.