Contract trading superficially appears to be a financial derivative tool, but in reality, for most retail investors, its operational logic is closer to DB than to true investment. Here are the key reasons for this analysis:
1. High leverage: amplifies profits but also amplifies risks
- DB characteristics:
- In casinos, you can bet on 'big or small' or 'odd or even', with unlimited leverage (for example, odds of 1:100)
- In contract trading, exchanges offer 10x, 50x, or even 100x leverage, similar to 'betting direction', but with slight volatility leading to liquidation.
- Real-world impact:
- Even if you predict the direction correctly, short-term volatility can still lead to liquidation (for example, BTC rises 5%, but if you go long at 100x leverage, a 1% pullback means you lose everything)
- Long-term statistics: Over 90% of retail contract traders ultimately lose, with outcomes highly similar to gamblers.
2. Zero-sum game: the money you earn is the money someone else loses
- DB essence:
- In casinos, the money you win comes from the losses of other players (after the dealer takes their cut, the overall funds flow out)
- The contract market is the same; exchanges earn fees ('rake'), and the profits of winners come from the liquidations of losers.
- Market manipulation:
- Large funds (whales, market makers) can create 'spikes' by manipulating the market, intentionally triggering retail liquidations (similar to casino dealers controlling the game)
3. Short-term randomness: Technical analysis fails
- DB logic:
- Casino games (like roulette, dice) have random short-term results, but long-term probabilities favor the house.
- In contract markets, short-term prices are influenced by emotions, news, and manipulation, rendering technical analysis (candlesticks, indicators) completely ineffective in extreme market conditions.
- Case:
- In March 2024, BTC surged 10% in one hour before crashing, resulting in countless high-leverage contracts being liquidated, and no one could predict it.
4. Psychological addiction: Dopamine stimulation similar to DB
- Instant feedback:
- DB provides the thrill of instant wins and losses, making people addicted.
- Contract trading is the same; it can double or go to zero within minutes, stimulating users to keep increasing their bets.
- 'Recouping losses' trap:
- After losing money, gamblers often want to 'win it back' in the next round, and contract traders often continue to deposit after liquidation, ultimately losing more and more.
5. The 'casino' role of exchanges
- Exchange profit model:
- Casinos make guaranteed profits through 'rake' (fees), while exchanges profit from funding rates and liquidation gas fees.
- Possibility of 'black box':
- Some small exchanges have issues like 'spikes' and 'slippage manipulation', similar to cheating in casinos.
The only difference between contracts and DB:
- DB (like lotteries, casinos) is a clearly regulated random game.
- Contract trading wears the guise of 'financial tools', but retail play is indistinguishable from DB.
Conclusion: Should ordinary people play contracts?
✅ Suitable groups:
- Professional traders (hedging risks, arbitrage).
- Institutions (market making, quantitative strategies).
❌ Unsuitable groups:
- Retail investors (especially high-leverage players) will inevitably lose in the long run.
- Emotional traders (easily get carried away and increase bets).
If you can't control your 'gambling instinct', contracts are just a casino with a different skin.
👉 What do you think? Do you believe contracts are DB or investment tools?
(Rational discussions are welcome, mindless shouting is rejected)