In the cryptocurrency market, the bloody news of contract liquidations seems to play out almost every day. Some wake up to find their accounts at zero, while others become bankrupt in an instant. Strangely, however, countless investors still willingly take risks and step into this 'battlefield'. When many confidently declare, 'I only use 5x or 10x leverage, the risks are controllable', they are unknowingly trapped in a deadly cognitive bias.
Most investors have a fundamental misunderstanding of leverage. The leverage multiple indicated by the platform is essentially a parameter of its risk control system and is not directly related to the actual risk faced by traders. In the cryptocurrency market, where volatility can be described as a 'roller coaster', true risk calculation should center on stop-loss limits and the scale of principal. The correct strategy is to use a diversified position-building approach: invest 10%-20% of your principal each time, keep the total position at 2x (short) to 4x (long) of the principal, and lock the maximum stop-loss risk for a single trade within 20% of the principal, ideally maintaining an average risk exposure of 10%. Learning to appropriately go short is also a necessary skill.
The cruel reality of contract trading is that technical analysis, market maker movements, and candlestick patterns are not the key determinants of success or failure. You can question the effectiveness of technical indicators, disbelieve the notion of 'market maker control', or even doubt the value of mainstream coins like BTC. However, these differences in perspective do not directly affect profits. But there is one ironclad rule that no one can break—risk management ability directly determines life and death. The ability to accurately identify, quantify, and control risks, as well as decisively exit during a crisis, is the only passport to survive in the contract market.
From the essence of returns, the seemingly attractive excess returns in contract trading are actually built on the failures of counterparties. When you achieve a 300% return with 3x leverage, the additional 200% profit is essentially the 'tuition fee' of those who were liquidated due to poor risk control. The harsh truth of this zero-sum game is: to take someone else's money, you first must not become the one being harvested.
This unique profit mechanism creates a huge difference between the contract market and the spot market. Spot investors can patiently 'lie flat' and wait for their positions to recover, while contract traders who get trapped often find themselves liquidated before dawn. It is precisely this coexistence of high risk and high return that magnetically attracts countless investors who believe they can tame risk, as they continuously chase wealth on the edge of a knife.