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3/21: The Truth About Leverage: Can 100 Times Leverage Really Make You Rich Overnight?
In the perception of many, leverage is the elevator to financial freedom and also the push into the abyss.
But as a hardcore logician, I only have one perspective on leverage: leverage is a 'multiplier' for adjusting the efficiency of fund usage, not a 'magnifying glass' for predicting profits and losses.
1. Redefining leverage: the 'redundant backup' of funds
Many people use 100 times leverage to earn 100 times. This logic is fundamentally flawed.
The logician's approach: If I have 10,000 USDT, I want to buy BTC worth 10,000 USDT. I can use 1x leverage to use all the principal, or I can use 10x leverage to only use 1,000 USDT as margin.
But as a hardcore logician, I only have one perspective on leverage: leverage is a 'multiplier' for adjusting the efficiency of fund usage, not a 'magnifying glass' for predicting profits and losses.
1. Redefining leverage: the 'redundant backup' of funds
Many people use 100 times leverage to earn 100 times. This logic is fundamentally flawed.
The logician's approach: If I have 10,000 USDT, I want to buy BTC worth 10,000 USDT. I can use 1x leverage to use all the principal, or I can use 10x leverage to only use 1,000 USDT as margin.
2/21: Big Pot Meal vs Separate Meal System - Full Margin and Isolated Margin, that is the 'life and death isolation zone' of your account balance.
Yesterday we talked about stop-loss, which is meant to preserve capital. Today we take it a step further and discuss the 'margin mode' in contracts.
Many newcomers enter the market and do not even know they can switch modes, directly defaulting to full margin with high leverage, resulting in an instant zero.
In the eyes of hardcore logicians, the difference between these two modes is essentially the logical difference between the 'big pot meal system' and the 'separate meal system'.
1. Full Margin Mode (Cross Margin): The risk-sharing 'big pot meal'.
Logic: All available balance in your contract account will be automatically considered as the margin for all full margin positions.
Many newcomers enter the market and do not even know they can switch modes, directly defaulting to full margin with high leverage, resulting in an instant zero.
In the eyes of hardcore logicians, the difference between these two modes is essentially the logical difference between the 'big pot meal system' and the 'separate meal system'.
1. Full Margin Mode (Cross Margin): The risk-sharing 'big pot meal'.
Logic: All available balance in your contract account will be automatically considered as the margin for all full margin positions.
1/21: Are contracts an elevator to wealth or a deep pit for burying people? — The first letter of caution for newcomers
Many friends enter the contracts market attracted by those screenshots of 'hundred times leverage and doubling overnight.'
I am someone who has been deeply involved in technology for many years and is accustomed to viewing the world through logic and probability. From my perspective, contracts are not gambling; they are an extremely precise digital game concerning 'mathematical expectation' and 'risk control.'
If you have just opened the contract trading page, please engrave these three sentences in your mind:
1. Leverage is not meant to 'amplify greed'; it is meant to 'increase capital efficiency.'
Many newcomers think that 100 times leverage is meant to earn 100 times. Wrong! The essence of high leverage is to allow you to use a very small amount of capital (margin) to leverage positions while keeping the remaining funds on hand to manage risks. If you fully leverage with high multiples, that is not trading; it is 'self-immolation.'
I am someone who has been deeply involved in technology for many years and is accustomed to viewing the world through logic and probability. From my perspective, contracts are not gambling; they are an extremely precise digital game concerning 'mathematical expectation' and 'risk control.'
If you have just opened the contract trading page, please engrave these three sentences in your mind:
1. Leverage is not meant to 'amplify greed'; it is meant to 'increase capital efficiency.'
Many newcomers think that 100 times leverage is meant to earn 100 times. Wrong! The essence of high leverage is to allow you to use a very small amount of capital (margin) to leverage positions while keeping the remaining funds on hand to manage risks. If you fully leverage with high multiples, that is not trading; it is 'self-immolation.'
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