Under high leverage, a single candlestick can wipe out the account. This is not investing; this is roulette.
My brother stared at the screen, his eyes blank. The account balance of 40,000U turned into a few hundred U in a matter of minutes. "I will never touch contracts again," he murmured. But I know this is already the third time he has said this this year.
Last time when he flipped 1500U to 40,000U, it wasn't like this. At that time, he was full of confidence, claiming that he had grasped the pulse of the market, "The crypto world is simply an ATM." The achievement of turning it 26 times in two days made him forget who he was.
By tonight, five days later, he no longer dared to open the trading app.
Contracts: 'Pleasure poison' dressed in financial attire
Cryptocurrency contract trading appears to be a financial derivative, but in reality, it is a carefully designed dopamine generator.
It exploits the most primitive gambling psychology in humans: intermittent reinforcement. When you occasionally gain huge profits through high leverage, your brain remembers this pleasure, driving you to repeat this behavior.
I've seen too many beginners who start by trying small amounts, only to get deeper and deeper after tasting success. They may initially use 5x leverage, gradually increasing to 20x, 50x, or even 100x. In the highly volatile cryptocurrency market, this is akin to riding a unicycle on a tightrope.
Leverage is a double-edged sword; it can amplify your profits as well as your losses. For example, with 10x leverage, a 10% price reversal can lead to a total loss of margin. In the cryptocurrency sphere, daily fluctuations of 50% are considered normal.
The four major traps for beginners getting liquidated
Combining my brother's experience and observations in the industry, beginners often fall into these four pitfalls when trading contracts:
1. Emotional trading, chasing highs and cutting losses
Seeing prices soar, you rush in, fearing to miss out; seeing prices plummet, you panic sell. This kind of operation is entirely driven by market emotions, often buying at the peak and selling at the floor. My brother chased after more when the market was at its craziest, only to encounter a flash crash, missing even the chance to set a stop loss.
2. Lack of knowledge, misunderstanding of mechanisms
Many beginners even do not understand the difference between isolated and cross margin modes, do not know how margin is calculated, and do not understand the logic of forced liquidation. By the time they realize the problem, it’s already too late. My brother mistakenly used cross margin as isolated margin, causing losses in one asset to directly affect other positions.
3. Blindly believe in 'gods', lacking independent judgment
Social media is filled with various 'signal masters', making it easy for beginners to follow trades unconditionally. My brother once followed a 'god' to short, but the other party closed the position early, leaving him to handle the position alone until liquidation.
4. Position out of control, leverage too high
This is the most fatal mistake. Many people think that the higher the leverage, the more they earn, often operating with full margin. But experienced veterans know that with a 10,000 USDT capital using 50x leverage, only a 2% adverse fluctuation is needed for forced liquidation. My brother was like that, investing all 40,000 USDT and using 20x leverage; the outcome was predictable.
How to avoid becoming a 'leek' in contracts?
If you still insist on trying contracts, at least listen to a few of my pieces of advice:
1. Start from extremely low leverage
Beginners should keep leverage within 3-5 times. This is not to make big money but to familiarize yourself with the mechanism. Low leverage gives you more reaction time and makes it less likely to be instantly liquidated.
2. Always set a stop loss
Setting a stop loss is a must! This is the only way to control the maximum loss per trade and protect your capital. Not setting a stop loss is like driving without a seatbelt. My brother suffered a huge loss once because he couldn't bring himself to set a stop loss, always fantasizing that the market would turn around.
3. Manage your positions well
The funds used for a single trade should not exceed 5%-10% of total capital. Always ensure that even if this trade hits a stop loss, you still have sufficient capital for the next operation. 'Staying alive' is more important than 'making big money'.
4. Choose reliable platforms
For beginners, choose reputable mainstream exchanges with a large scale. Small platforms carry a high risk of running away, and you must not lose big due to low fees. After all, the safety of your funds is always the top priority.
The true way to survive in the cryptocurrency world
After five years in the cryptocurrency world, I've gradually understood one principle: making money in crypto relies on being slow, not fast.
Those who can achieve stable long-term profits do not rely on overnight wealth but on risk control and capital management. They may spend most of their time waiting, only betting when they are sure of the opportunity.
If you really want to invest in cryptocurrency, spot trading is a more suitable choice for ordinary people. Although the returns may not be as exaggerated, at least you won't lose everything overnight.
I remember the night my brother got liquidated; we drank until 3 a.m. He said something that left a deep impression on me: 'I once thought I was playing contracts; now I realize it was the contracts playing me.'
The cryptocurrency world is not short of opportunities; what is lacking is those who survive to the next bull market. Protecting your capital is more important than anything else. When you feel the urge to go all in, ask yourself: If this money goes to zero, can I still live well?
Wise investors know that the market always has opportunities, but the premise is that you must always stay at the table.
Stay calm and protect your capital. This is the most valuable lesson I've learned in my five years in the cryptocurrency world.#巨鲸动向 $ETH
