1. Leverage mechanism: The 'deadly magnifying glass' of risk
High leverage (such as 100 times) is essentially a 'risk front-loading tool' — it allows investors to leverage a small amount of capital to take on risks far beyond their capacity. For example, a 1% reverse fluctuation can cause a 100x leveraged position to be liquidated, while a spot investment requires a 100% loss to reach zero. This temptation of 'betting small to win big' causes traders to ignore the core truth: leverage can amplify profits, but it also synchronously accelerates the speed of losses. Additionally, exchanges often exploit liquidity gaps in the market to create 'spike markets' (short-term extreme fluctuations) that precisely trigger retail liquidation, forming 'targeted harvesting' of high-leverage positions.
2. Three deadly flaws of retail trading behavior
1. Cognitive dislocation: Treating contracts as 'gambling tools' rather than 'hedging tools'
Most people confuse 'investment' with 'speculation', mistakenly believing that high leverage is a shortcut to quick wealth, while ignoring that the core value of contracts is risk hedging and capital efficiency management (such as using 20x leverage to hedge against spot declines), rather than betting on price movements in one direction.
2. Emotional decision-making: Dominated by the 'gambler's mindset'
The high volatility of leveraged trading stimulates adrenaline, leading to frequent chasing and cutting losses, and holding positions without stop-loss (such as adding positions against the trend to dilute costs). Behavioral finance studies show that the decision-making error rate of leveraged traders is 47% higher than that of spot investors, rooted in the irrational persistence under the psychology of 'loss aversion'.
3. Lack of a systematic trading framework
90% of losers do not have a clear trading strategy (such as position management, stop-loss and take-profit rules), relying on intuition or 'tips' to operate, ultimately becoming victims of market fluctuations.
3. Lack of risk control: The 'death switch' of contract trading
Spot investments can recover through long-term holding, but contracts have a 'forced liquidation mechanism' — lack of stop-loss awareness can directly lead to capital going to zero. Data shows that traders who strictly implement stop-losses have an 82% lower liquidation rate than those without discipline, and reasonable leverage (such as 5-10 times) can control single losses within 5%-10%, avoiding 'instant death'.
4. Market essence: The 'harvesting logic' under zero-sum games
The contract market is essentially a 'zero-sum game'. Coupled with exchange fees, funding rates, and other costs, retail investors are naturally at a disadvantage. Institutions, through quantitative strategies, market-making mechanisms, and capital advantages, precisely harvest the 'liquidity premium' from high-leverage retail investors, forming an ecology where 'a few profit while many lose'.
Summary: The core reasons for contract losses
1. Abuse of leverage: High leverage compresses risk to the extreme, with almost zero tolerance for fluctuations;
2. Cognitive errors: Confusing speculation with investment, treating contracts as gambling tools rather than risk control tools;
3. Lack of discipline: No systematic strategy, emotional trading leads to ineffective stop-losses and uncontrolled positions;
4. Ecological disadvantage: In a zero-sum market, retail investors are comprehensively behind institutions in terms of capital, technology, and information.
Contracts are not untouchable, but must meet three prerequisites — a clear trading system, strict risk control discipline, and controlling leverage within the range of 'single losses not exceeding 5% of capital'. Otherwise, high leverage becomes a 'legal capital crusher', and the 90% loss rate is essentially an inevitable result of 'human weakness + market rules'.
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