Losing money is not due to poor judgment, but because you don't understand these 4 traps!!
Many beginners have this feeling when trading contracts: their directional judgment is correct, but their account still gets liquidated. The problem is not in 'judgment,' but in understanding the rules of contracts.
Contracts are not ordinary spot trades; they are more like a zero-sum game. The profit you earn often comes from someone else's liquidation; and the part you lose may just be filling someone else's profit. To truly stand undefeated, you must first recognize several hidden logics:
1. Funding rate is the thermometer of the market.
Many people only see the funding rate as a fee, but it is more like a signal.
When the funding rate is consistently high, it indicates a one-sided market, and the main force often reverses to harvest.
When the funding rate is negative, it represents excessive sentiment on the other side, making it easy for the market to experience a reversal.
Understanding how to observe the funding rate allows you to detect risks in advance, rather than blindly following the crowd.
2. The liquidation line is not an arithmetic problem.
Do you think that a 10x leverage drop of 10% will cause liquidation? Not necessarily.
Exchanges add extra liquidation costs in their calculations, so the actual liquidation point is often 1%-1.5% earlier than you expect. Therefore, do not set your stop-loss too rigidly; leaving some buffer space is the real risk control.
3. High leverage is a double-edged sword.
Many people enjoy 50x or 100x leverage, thinking they can quickly recover losses. But you must understand: fees and funding rates are calculated based on the enlarged position.
Once a position is held too long, the principal will be continuously 'eroded'; even if the market remains stagnant, your account is still bleeding. The correct approach is to use high leverage for short-term trades, taking 2-4% profit and exiting, never getting too attached.
4. Mindset and position management are the ultimate lifelines.
The market will not rise just because you hold a large position, nor will it be smooth just because you increase your leverage. Position management and stop-loss mechanisms are the fundamentals that allow you to go far.
Experts do not become rich from one trade, but from countless moments of 'preserving the green mountains.'
Getting the direction right has never been the most important issue in contracts.
What truly differentiates is whether you understand these hidden rules and implement risk control in your strategy.
If you want to learn more about cryptocurrency news and understand the direction of the next wave of market trends, follow A-Lu's rhythm and enjoy the feast!!
