The core reason lies in the high-risk nature of contract trading, especially under high leverage, where risks can be extremely amplified. This can be understood in the following aspects:
1. Leverage amplifies risk, making liquidation easy
Capital utilization rate ≠ risk-free: The leverage of the contract (like 100X, 125X) can amplify profits, but it also greatly magnifies losses. For example, under 100X leverage, a 1% fluctuation in currency price can wipe out the principal, and 'flash crashes' (significant price volatility within a short time) are common, which may trigger liquidation in seconds, leaving no time to react.
2. Trading costs and mechanisms increase risk
Perpetual contracts incur 'funding fees' daily (both long and short parties pay each other, which can be positive or negative, but costs accumulate over long-term holding). Delivery contracts have 'premiums' (the difference between contract price and spot price). The longer the position is held, the higher the cost, which is equivalent to 'implicit loss'.
Many people play contracts without setting stop losses, thinking 'it’s fine if the spot drops 30%', but under contract leverage, a 30% fluctuation can directly wipe out the principal (for example, with 3x leverage, a 33% drop leads to liquidation), and holding the position may force you to cut losses due to margin call pressure.
3. Most people lack a trading system and discipline
Treating contracts as gambling: under high leverage, short-term price fluctuations are highly random, and many people go all-in without understanding the rules. Essentially, it’s betting on price rises and falls, not rational trading. For example, believing that 'the support level won't break' and going long with all capital, once it breaks, liquidation occurs directly, without considering risk tolerance.
Long-term investment is not suitable for contracts: Long-term investment should ignore short-term fluctuations, but contracts have holding costs (funding fees, premiums), and if held long-term, price fluctuations + cost accumulation mean that risks are much higher than spot trading, potentially leading to 'making a profit in the market but losing money'.
4. The premise of playing contracts reasonably
If you must play contracts, you must meet: clearly defined maximum loss range: for example, using a $100,000 principal, being able to bear a $10,000 loss, and then calculating the position based on leverage (like 20x leverage, at most open 5000 oil positions, stop loss at 20% drop, which would lead to a loss of exactly 1000 oil).
Low leverage + strict stop loss: leverage should not exceed 3 times, and every trade must have a stop loss set. Never hold positions; treat contracts as a tool to 'increase capital utilization' (such as lightly going long in a bull market), not as a gambler's 'get-rich-quick scheme'.
Contracts are essentially tools for professional traders to hedge risks or optimize capital efficiency, but for ordinary players, high leverage, trading costs, market volatility, and other factors can turn it into a 'graveyard for gamblers'.
If there is no mature trading system, strict discipline, and risk tolerance, playing with contracts, especially high leverage, is almost equivalent to gambling with the principal; liquidation is just a matter of time.
Only this type of person makes money in the cryptocurrency market, which does not depend on the techniques and methods used, but on your self-discipline. Trading in the crypto market is sometimes not a battle of strategy but a contest of time and patience.
In the crypto space, it’s essentially a battle between retail investors and whales. If you don’t have cutting-edge news or first-hand information, you can only be taken advantage of! Those who want to collaborate on layout and harvest from the whales can follow me!
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