The longer you stay in the crypto world, the more you realize one thing—if you don't understand these terminologies, you'll pay more in tuition than others.

Let's start with the simplest.

**Spot trading is straightforward**: buy directly with U or fiat currency, and the funds are available immediately. Liquidation? It doesn't really exist. When the market halves, losing money is inevitable, but your account won't be wiped out instantly. This is the fundamental difference between spot and derivatives trading. For example, with coins like DCR, you can freely add or reduce positions without the risk of forced liquidation.

But don't get it wrong—this doesn't mean "safe." Losing money can happen just as quickly.

**The real watershed comes with derivatives**.

It's not about technical skills; it's purely a battlefield of discipline and probability.

Seeing 5x, 10x, 20x leverage returns, everyone gets tempted. But here's the problem—if you use 20x leverage long position, a 5% drop in the coin price will wipe out your account. This isn't scare tactics; it's basic math. High-volatility coins like AT are even riskier under leverage. Once you're in, every percentage point can determine life or death.

**Here's a key lesson: you must understand U-based and coin-based contracts**, which is a prerequisite for trading derivatives.

How to trade U-based contracts? All profits and losses are settled in U. What's the benefit? Stability, easier control, and risk quantification. Suitable for beginners, usable even in bear markets. When the market direction is unclear, practicing with U-based contracts helps develop a sense of rhythm and gradually understand the strategies.

And what about coin-based contracts? Settled in the coin itself. It’s interesting in a bull market—you earn coins while the coin price is rising, and your profits can double or even multiply several times. That kind of thrill is indeed tempting.

But in a bear market, it becomes an abyss. As the coin drops, your margin drops too. Losses are not linear but double whammy. Many people get liquidated at this moment.

**Honest advice**:

Start honestly with U-based contracts, keep your positions small, and never be greedy with leverage. Only after you can clearly see the trend and have a stable trading logic should you consider the high profits of coin-based contracts.

Don’t be brainwashed by high leverage.

If you can't understand the market, lack a clear direction, and your cognition is still a mess, that’s the root of losing money. When luck is on your side, you might make some gains, but in the long run, you'll only cut losses and exit. Those who truly survive in the crypto space are invariably those who spend time learning trading logic, managing risks, and maintaining discipline.