I just noticed that quite a few new people are interested in trading futures, but clearly they don't fully understand the mechanics and risks involved. Today, I want to share some personal experiences to help you avoid the mistakes I’ve made.

First, futures, also known as leveraged trading, is a form of order placement based on price trend predictions. If you expect the price to go up, you go long. Conversely, if you predict the price will go down, you go short. On the surface, it seems simple, but behind it are risks that not everyone is aware of.

The biggest danger when trading futures is leverage. Most exchanges allow you to use leverage up to X100. This means if you have only $1, the exchange allows you to borrow an additional $99 to participate in a trade with a total capital of $100. The problem is, if you choose the wrong direction, losses can accumulate very quickly. When losses reach a certain threshold, the exchange will automatically liquidate all your assets, and you lose 100% of your principal.

That’s why many newcomers to futures trading lose all their money after just a few weeks. So, before you decide to participate, make sure to thoroughly understand this type of trading.

Now, I will talk about risk management. First, you need to understand two important concepts: SL (Stop Loss) is the point to cut losses, and TP (Take Profit) is the point to lock in profits. All exchanges currently have features to automate these two points. When trading futures, you must carefully configure these features to avoid surprises.

Based on my experience, I have a few rules to suggest for beginners:

If you trade futures with Bitcoin, keep leverage at X5 or below. Bitcoin is highly volatile, so caution is necessary.

For trading Ethereum or other altcoins, you can use leverage X3 or below. These coins tend to be more volatile than Bitcoin.

Instead of risking your entire capital on a single order, split it into multiple smaller orders. This approach helps you better withstand losses if the market moves against your prediction.

Pay special attention to the liquidation point. Try to set it as far away as possible because if it’s too close, a small price swing can trigger liquidation before you even have a chance to react.

Remember, what I share is based on personal experience and is not professional investment advice. Always manage your risks seriously when trading futures, especially if you are still new to this type of trading.