Today, let's talk about the pitfalls of contract trading.

Recently, a fan messaged me, saying that they were right about the direction, but their order was held for four days, charged 1000U in funding fees, and eventually liquidated. After the position was closed, the market took off...

This is a very typical case of being wrong about the rules, not the market.

Are you only focused on ups and downs? Do you understand the real rules of the game for contracts?

Let's analyze a few common pitfalls. Avoiding these may make your contract journey more stable.

First pitfall: Funding fees, quietly draining your wallet.

Many people who trade contracts only focus on the candlestick charts and don't realize that funding fees are quietly reaping profits.

Funding fees are charged every 8 hours, and the platform charges fees based on the direction of your long or short positions.

When the fee rate is positive, long positions must pay money to short positions.

When the fee rate is negative, short positions must pay money to long positions.

For example, going all-in on a long position, being right about the direction, but holding it for a long time, being charged several hundred U in funding fees for two consecutive days, resulting in liquidation, and then the market takes off the next day. This is very painful.

Suggestions to avoid the pitfall:

Avoid high fee rate periods (two consecutive rounds of funding fees higher than 0.1%)

Control holding time, preferably no more than 8 hours

If the direction is clear, try to be on the side of the funding fee that goes against the trend.

Second pitfall: The liquidation price is not the line you calculated.

Many people think that with 10x leverage, a 10% drop will cause liquidation, but they find that the platform liquidates the position after only a 5% drop.

Why?

Because the platform will add liquidation fees, and the liquidation line is closer than you calculated.

Solution:

Don't go all-in, use the "isolated margin" mode to protect the overall situation.

Control leverage between 3-5x to avoid the risk of high leverage.

Leave enough margin to automatically extend the liquidation distance.

Third pitfall: High leverage = slaughtering knife.

The seemingly exciting 100x leverage actually has many hidden costs behind it.

Transaction fees and funding fees are calculated based on the funds you "borrowed." Even if you are right about the direction and profit several hundred U, the transaction fees and funding fees may cause you to lose money in the end.

Suggestion to remember:

High leverage for short-term trades, low leverage for long-term holds.

The higher the leverage, the greater the risk, so don't be impulsive.

It's not that you don't know how to trade, it's that you don't understand the rules.

Exchanges are not afraid of you losing money; they are afraid of you understanding their "tricks."

Want to survive and make money? Don't bet on direction; bet on the rules.

If you want to walk more steadily in the crypto world, follow me, avoid these pitfalls, and let you avoid detours!