High leverage is not a fast track to wealth, but a shortcut to bankruptcy.
When I first encountered contract trading, I was also attracted by those stories of 'doubling overnight.' Watching others share their profit screenshots, I calculated in my mind that as long as I seized a wave of the market, I could achieve financial freedom. But I soon discovered that the fact that 95% of beginners do not survive beyond three months is not just a scare tactic—I have seen friends lose all their savings in one night, and I have witnessed traders go from full of hope to complete despair.
The market is never short of tragedies, but the vast majority of tragedies stem from the same reason: human weaknesses are amplified by leverage. Once you invest real money in the market, greed and fear begin to alternately control your decisions.
1. Behind liquidation: it is not that the market is too cunning, but that you are too naive.
I have seen the most painful case, which was a friend who made a 'perfect' trading plan. He discovered an ascending flag pattern, set what seemed like a reasonable stop-loss point, and then confidently entered the market. At first, everything went smoothly, with unrealized profits in the account—but just a few hours later, the market suddenly reversed.
Under normal circumstances, he should execute the stop loss. However, the psychology of 'loss aversion' begins to take over, and he tells himself: "Just wait a little longer, it might just be a false breakout." Thus, he made the first fatal move: moving the stop loss.
The result is predictable; the price continues to fall, and he not only loses the initial capital but also goes bankrupt due to margin calls. This story is being replayed every day among countless traders, with the only difference being the amount.
2. Leverage is a trap: it seems like a shortcut, but it is actually a cliff.
Many platforms now offer leverage of up to 40 times or even 100 times, which is simply a 'meat grinder' prepared for beginners. With ten times leverage, if the market moves against you by 10%, your principal will be zero.
What is even scarier is that high-leverage markets have inherent vulnerabilities. When prices fluctuate, cascading liquidations reinforce themselves like a waterfall. This is why the market often experiences 'spike' movements—large leverage positions are precisely penetrated.
You think you are investing, but in reality, you are gambling with your life. Leverage does not increase your winning rate; it only amplifies your emotional fluctuations. Under strong emotional influence, it is almost impossible to remain calm and rational.
3. Market truth: your stop-loss order has become someone else's prey.
In the cryptocurrency market, which is under-regulated, the technical points that retail traders rely on often become 'prey zones' for precise strikes.
Big capital players (whales) have the motivation to manipulate prices through short-term increases or decreases, triggering retail stop-loss orders and liquidation positions to gain liquidity. This means that your carefully set stop-loss point may just fall right into someone else's target.
When you are tormented by the repeated "stop loss and then the market rebounds", you should understand that this is not bad luck, but an inevitable result of market structure.
4. My honest advice: why I advise you to start with spot trading.
If I can't convince you to completely avoid contracts, at least please hear me: beginners should start with spot trading.
The risk boundary of spot trading is clear; at most you will lose your principal, and it won't lead to negative balances. The operations are also simple, buying low and selling high to profit from the price difference, without needing to calculate leverage or monitor margins, allowing you to focus on studying market rules.
Spot trading is a low-risk 'training ground' that can help beginners avoid emotional trading, prevent chasing highs and selling lows, and cultivate a long-term mindset. Through spot trading, you can gradually build your understanding of the market, learn about price fluctuation patterns, and develop your own trading strategy.
More importantly, spot trading gives you time to think and learn, rather than staring at the screen all day, letting every small fluctuation affect your emotions. In the cryptocurrency market, surviving is more important than making quick money.
Conclusion: The essence of trading is a survival game.
The cruelest truth of this market is: most people are not defeated by the market, but are destroyed by their own greed and fear.
I have seen too many people fall into a vicious cycle: after losses, they rush to recover their capital, invest more money, and then lose even more. Until credit cards are overdue, debt is piling up, and even basic living becomes a problem.
If you are just entering this market, please remember my advice: stay away from contracts and start with spot trading. This is not cowardice, but wisdom. Only by surviving first can you have the opportunity to learn the real investment logic.
The market is always here, and opportunities never disappear. But once the principal and confidence are lost, it becomes difficult to regain them.
In this market, it is too difficult for one person to walk alone. I hope you can avoid the traps I have seen and find your own stable profit path.
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