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Crazy contracts: 14 billion yuan overnight, leverage up to 125 times

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100 times leverage, 125 times leverage... More and more coinage players are trading highly leveraged contracts.

Original title: "crazy coinage contract: leverage up to 125 times, $2 billion overnight"

A blockchain

100 times leverage, 125 times leverage... More and more coinage players are trading highly leveraged contracts. In this case, if the currency goes up 1%, their assets can double; But if the currency falls 1%, they lose their money. This is a very risky game, coinage becomes a dangerous casino, trading platform is behind the hand. The contract market is rife with get-rich-quick stories, but "99.5 per cent of retail investors are out of the market". In the end, even the trading platforms themselves are often not immune. Greed is the road to the abyss.

01 broke in

For contract players, the night of March 12 was a cold night of carnage.

That night, the price of bitcoin dropped more than 15 percent in 15 minutes.

Everything was so caught off guard. Coin circle contract player xiao zhang said, at that time, he received a trading platform text message, was told that he was about to explode. He quickly turned on the software to close the position manually.

Almost at the same time, he received a warning message that the warehouse was full -- tens of thousands of yuan just went up in smoke.

AICoin data shows that on the night of March 12, the market had $2 billion of funds to blow up, with the maximum amount of $10 million, and the average amount of $51,000.

Around this explosion incident, there is a joke widely circulated in the circle:

A novice trader shorted bitcoin on March 12 without knowing to put a stop-gain or loss. That night, bitcoin crashed, turning his thousands into hundreds of thousands.

After making a lot of money, he thought the price would recover and made more orders.

The next morning, bitcoin continued to plunge, wiping out the hundreds of thousands of dollars he had made.

Out of the mix, sooner or later is to return.

In the coinage, contracts have long been traded. In short, it is futures trading.

Similar to the traditional futures market, the currency ring contract trading features two main ways to play: one is both long, and short, players can two-way profit; The second is to have leverage, the player can be extensive with small.

The first platforms to enter the contract market were OKEx and BitMEX, which carved up the domestic and international contract markets in the early years.

Subsequently, Huobi, won-an, matcha, BiKi, Gate and others entered the contract market successively.

"Right now, Huobi, coon and OKEx are fighting a war of words, and most of it is about contracts." As one trader pointed out.

& have spent Jay, CEO of OKEx, teased Huobi about his contract business on twitter. & have spent

How fast are contract trades growing? There is a set of data from non-small size that can be intuitively illustrated:

In 2018, two of the world's top 10 trading platforms by volume opened contracts;

Today, eight of the world's top 10 trading platforms by volume have contracts.

The leverage they are offering is also increasing to a staggering degree.

In the early days, many trading platforms traded contracts with leverage multiples of five, 10, or as much as 20.

Today, some trading platforms are already offering far more leverage than that. For example, OKEx's perpetual contracts can offer up to 100 times leverage, and coinan can offer 125 times leverage...

Such a high leverage, with a great deal of risk.

Take the 100-fold leverage offered by OKEx: if a player goes long, the asset can double if the currency goes up 1%. But if the currency falls 1%, the player will blow up and lose all of his principal.

In contract markets, sudden wealth and ruin are often instantaneous.

02 gambling

What players are attracted to the contract market? They are typically gamblers, often saying to themselves, "give me a lever and I can lose the world."

"There are no 'Buddha players' in the contract market." Coin circle player ding CAI told a block chain.

"The trading platform APP will display the real-time yield of each order, and after 100 times leverage, the yield will change by three digits every second. One second it may be 200%, the next it may be 300%." He said.

In the face of such a sharp rise and fall, almost all players will be staring at the plate. And currency market 7 * 24 hours of trading, let a lot of players feel more exhausted.

"I couldn't sleep when I signed up for a high-powered contract. I had to check my phone all the time." Ding Cai said.

What's more, people who have played the contract for a long time, like experienced gamblers, will become "addicted" and cannot quit.

Two years ago, the OKEx trading platform was questioned "unplugged" unable to trade, as a contract player is one of the victims.

"I was getting text messages reminding me that my position was about to explode. I couldn't open the APP, I couldn't do anything, I just watched my position explode." "I can't describe the feeling of despair," ding recalled.

He overdrew almost all his credit CARDS and faced debts of hundreds of thousands of dollars every month. "At the end of the day, every time I see a number, I don't think it's my money anymore."

In 2019, in order to quit contract trading, ding applied to the trading platform to cancel his account, and was told by the customer service that "there is no such service". Under his anger, he went to the mobile business hall to cancel the phone number used for more than ten years.

He endured for some time, but in the end he couldn't. Next, he signed up for a new trading platform account with a new mobile phone number and jumped back into contract trading.

He said that he now in the currency playing contracts, are open 125 times the leverage, in advance to stop profit and loss, to avoid a burst, "win or lose is a matter of minutes."

"The currency market itself is volatile, and with 100 times leverage, trading contracts is like gambling." Block chain researcher zhou wei said.

"For some people, futures = online betting." The CEO of lebit mining pool, Andre, has also been outspoken.

The continuing boom in contract trading reflects one of the biggest problems in the currency world today -- the growing number of speculators buying up and selling down, and the dwindling number of "bitcoin believers" who are committed to hoarding.

"I used to be a" bitcoin believer ", hoarding COINS instead of speculating on them. But in the past two years, the price of bitcoin has not improved, and there is no sign of the legendary halving price. Zhang said.

In the view of some coinage players who do not play contracts, it is the proliferation of contract transactions that has led to the continued low price of bitcoin -- a large amount of money has been invested in highly leveraged gambling games.

"The trading platform should cancel contract trading and prohibit short selling, so that all the money goes to the spot area, everyone hoards the currency, and the currency price can go up." "Someone said playfully.

In the face of highly leveraged contract trading, the vast majority of coin circle retail investors, will be reduced to leeks.

"Many players make the mistake of thinking that if they beat 50 per cent, they will make money in the contract market." "But the truth is, they're not going to beat 50 percent of the people, they're going to beat 50 percent of the money. Behind 50 percent of the money, maybe 98 percent of the people."

In his view, with high leverage, a player's assets could increase tenfold overnight or fall to zero in an instant. Returns and risks look like equals, but they are not.

"When the market is good, many players close out their positions before their assets have risen 10 times. When the market is bad, they often keep their money in their hands and wait for it to go to zero." "The investment psychology of retail investors makes it impossible for them to make long-term profits in the contract market," he explains.

"Between 99.5 per cent and 99.9 per cent of retail investors will be blown up in the contract market." "Playing a contract is no different from gambling or taking drugs, and many players have no regrets unless they lose all their assets," concludes Mr.

03 driver

Why is the trading of coinage contracts so crazy? In the eyes of many coincircle players, the trading platform is a direct driver of this market.

For example, Huobi, OKEx, and coinan all launched contract contests to reward players with prizes such as luxury cars and iphones.

Huobi contracts masters with the slogan "play the contract, steal the iPhone and win the BMW" & contract; & have spent

So why are trading platforms so keen on the market for trading contracts?

The answer is simple - contracts are more profitable.

In 2019, ICO, trading, mining, mode currency and other methods are no longer popular, and it is difficult for the trading platform to make money on currency fees. The return to trading services themselves has become the common choice of many trading platforms.

On the exchange market, the volume of contract trades is much larger than that of the spot market.

In January 2019, the proportion of contracts traded on the OKEx platform was just 60%, according to TokenInsight. By October, it had climbed to 81%.

Non-small data show that on March 30, the trading volume of bitcoin on Huobi platform was 2.2 billion yuan in 24 hours, while the trading volume of contracts in the same period was 28.5 billion yuan, 13 times that of the former.

"The greed of players makes the trading platform more and more tricks. And these tricks, in turn, aggravate the greed of players." Zhou Wei said.

"Now there are more and more financial derivatives in coincircle, which directly increases the leverage ratio of the whole industry," he told a blockchain book.

In the face of 100 times of high leverage, the trading platform's own operation is also facing huge risks.

This is because, as a rule, in contract markets, once a currency price hits a player's breakout line, the trading platform will automatically close the position.

However, when the currency price rises and falls, the trading platform may not be able to close the position in the first time, resulting in "penetration", the platform's own assets will be damaged.

When the currency market plunged on March 12th, some of its profitable users were notified by officials that their assets had been "automatically shorted" to cover the platform's losses.

That is to say, as a result of currency price violent fluctuation, trading platform itself appeared capital loss. Some players who had made money were deducted by the trading platform to make up for the loss.

"In fact, all major trading platforms have a similar mechanism of 'position penetration recovery. Zhou explained.

"The two mechanisms are not completely fair, but a small number of users suffer more losses, so the dispute is more." He said.

Starting in 2018, he believes, most of the activism related to multiple trading platforms has been related to contract trading. In these cases, players stand on the rooftop in a death-threatening manner, or even drink dichlorvos in front of the trading platform.

"It is a pity to be cheated into rights. But anyway, the gambler in the casino is not worthy of sympathy." Zhou Wei said.

Warren buffett has been a staunch opponent of leverage.

"I've seen too many highly intelligent people screw up their business with leverage. "He told the company's shareholders in 2019.

Everyone wants to be the next buffett, but not everyone listens to buffett's admonition.