Abstract: This article will explore the issue of opening multiples for perpetual Bitcoin contracts, which has attracted attention. It will explain what a perpetual contract is and the principle of opening multiples. Then, it will elaborate in detail on how many times to open a perpetual Bitcoin contract from the perspectives of margin, leverage multiples, returns, and risks.
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What is a perpetual Bitcoin contract?
A perpetual Bitcoin contract is a futures contract without a fixed expiration date. Unlike traditional futures contracts that have a fixed expiration date, perpetual contracts have no expiration date limit and can be held until they are closed. Such contracts use margin and leverage trading, allowing traders to multiply their trading volume with a small margin investment. -
What is the opening multiple?
The opening multiple refers to the trading amount obtained by multiplying the margin owned by the trader by the leverage multiple. For example, if the margin is $1,000 and the leverage multiple is 10, then the opening multiple will be $10,000. -
Margin, leverage multiple, returns, and risks
3.1 Margin
Traders need to maintain a certain margin to trade perpetual Bitcoin contracts, and the amount of margin is a small part of the opening multiple. Traders should pay attention to margin changes, as market fluctuations may cause the margin to increase or decrease.
3.2 Leverage multiple
The higher the leverage multiple, the more funds the trader can trade, but the leverage multiple also increases risk. This means that the trader's return rate will be higher, but the possibility of loss will also increase.
3.3 Returns
Traders can obtain the principal plus profits; if the trade is successful, the return will be several times the opening multiple. In the case of an increase in the average trading price, traders can gain profits; conversely, they will incur losses.
3.4 Risks
Trading perpetual Bitcoin contracts also carries risks, and traders should fully understand market fluctuations and trading strategies. If the price fluctuates too much, traders may face more risks, including forced liquidation. Otherwise, the likelihood of traders making profits will increase.
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Suitable opening multiple
A suitable opening multiple depends on your investment strategy, risk tolerance, and market conditions. Generally speaking, if your risk tolerance is low, you can open positions between 1-5 times; if your risk tolerance is higher and you are familiar with market conditions, you can open positions between 5-10 times. However, please note not to blindly follow others' advice; decisions should be made based on your own situation. Unless you are very confident, do not attempt to open too high a position. -
Conclusion
When trading perpetual Bitcoin contracts, the opening multiple is an important factor. Choosing the right opening multiple is crucial, as it can determine the trader's returns, risks, and the level of asset protection. When selecting an opening multiple, traders should fully consider their investment strategy, risk tolerance, and market conditions.