In the cryptocurrency circle, contracts are like a double-edged sword. If used well, doubling your investment in a few days is not a dream; if used poorly, losing everything overnight is also very common. Many beginners end up with 'liquidation' on their first experience with contracts, not because the market is malicious, but because they make almost all the mistakes that beginners tend to make.
1. Excessive leverage, zero risk tolerance
Many beginners jump in with 20x or 50x leverage, thinking that higher multiples mean faster profits.
But they don’t realize that high leverage means your stop-loss space is extremely small; as soon as the price fluctuates a few points in the opposite direction, liquidation will be triggered.
The essence of contracts is to amplify volatility; under high leverage, you are not trading, but competing with the market to see who can hold out longer.
2. Lack of position management, full margin betting
In the spot market, being fully invested might just mean being stuck; but in the contract market, being fully invested with high leverage is suicidal.
Once the direction is wrong, there is no room for averaging down, no leeway to maneuver; even a single K line moving in the opposite direction is enough to wipe out your account.
3. Not setting a stop-loss, fantasizing that the market will definitely come back
In contract trading, not setting a stop-loss is the most fatal mistake.
Many people, after going in the wrong direction, not only do not close their positions but also continuously add to their positions to lower their costs; as a result, when the market continues to move against them, their losses are geometrically amplified until the system directly blows up.
Remember: a stop-loss is not admitting defeat, but a way to save your life.
4. Going against the trend stubbornly, without understanding the trend
Beginners often place orders based on their feelings, completely ignoring the trend. Clearly in a downtrend, yet they stubbornly try to catch the bottom, even increasing their positions while the market is declining, which is equivalent to deliberately sending themselves to their demise.
In the face of trends, the combination of high leverage and counter-trend trading is the most stable recipe for liquidation.
5. Emotional trading, losing due to mindset
Wanting to double your earnings, wanting to recoup losses, opening dozens of orders in a day, it’s surprising if you don’t get liquidated.
In contract trading, the result of losing control of your mindset is continuously increasing leverage, adding positions, and stubbornly going against the trend; ultimately the market can kick you out with just one fluctuation.
Contracts are not a beast, but their risks are far higher than in the spot market. If beginners want to survive longer, they must first learn position management, risk control, and stop-loss discipline, rather than immediately pursuing doubling their money.
In the cryptocurrency circle, not making money is not scary; what’s scary is being eliminated by the market without learning any lessons.
