Amidst the fluctuations of numbers, wealth comes and goes, while human nature has nowhere to hide under the magnifying glass of leverage.
Every time I open my phone, the screen is filled with screenshots of astonishing profits shared by the 'Contract God', claiming to leverage a few hundred dollars into tens of thousands or even hundreds of thousands in profits. The comments section is filled with cries of 'please take me along', as if they have found a shortcut to financial freedom.
However, flipping through the posts about liquidation records, there are few who pay attention to those stories of total loss—this is the true reflection of the contract market, one side is paradise, the other side is hell.
As an analyst who has been crawling and rolling in this circle for many years, today I want to talk frankly about why contract trading is so 'tempting', and why most people ultimately become part of the 'liquidation army'.
1. Where exactly is the 'magic' of contracts?
The leverage game of 'using four ounces to strike a thousand pounds'
The most attractive aspect of contracts is leverage. In traditional financial markets, achieving 2-5 times leverage is already good, but in the cryptocurrency space, 50 to 125 times leverage is commonplace.
Imagine you only have $1,000; with 10x leverage, you can operate a position worth $10,000. If the price of the coin rises by 10%, your principal doubles. This feeling of 'betting small to gain big' is something spot trading can never provide.
A two-way channel where both rises and falls can make money
In the stock market, you can only bet on rising prices, but in the cryptocurrency market, you can trade in both directions. Regardless of whether the market is bullish or bearish, as long as you judge the right direction, there are opportunities to profit.
When Bitcoin fell from its historical high in March 2025, savvy contract traders quickly shifted to short strategies, profiting even in a downturn. This characteristic of being able to profit from both rises and falls has made contract trading an all-weather 'wealth creation machine.'
24/7 non-stop stimulating experience
When the New York stock market closes and the London gold market rests, the cryptocurrency market never sleeps. This 24-hour uninterrupted trading feature satisfies modern investors' desire for instant feedback. For those seeking excitement, it's like an endless gambling game where you can place bets at any time and potentially become wealthy.
2. The cruel truth: Why are there so many liquidators?
High leverage is a double-edged sword
Leverage can amplify profits, but it can also amplify risks. Investors using 100x leverage may face liquidation risks when the market reverses by 1%. And in the world of cryptocurrencies, a 1% fluctuation can happen within minutes.
On March 12, 2020, 'Black Thursday,' the liquidation amount across just four exchanges exceeded 27.6 billion RMB in 24 hours. Under high leverage, even small price fluctuations can lead to the loss of principal—one Reddit user shared that he lost all $23,000 in his account due to a 1% price fluctuation in just 5 minutes.
'Spike' market conditions specifically treat disobedience
The common 'spike' phenomenon in contract trading is an important cause of liquidation. At certain times, prices may experience sudden and severe fluctuations that breach the strong liquidation price lines of many investors.
These seemingly unreasonable momentary fluctuations often leave many investors who have set stop-losses unable to escape unscathed. By the time you react, your account may already be at zero.
Human weaknesses are amplified
In contract trading, greed and fear are amplified to the extreme by leverage. Wanting to earn more after making a profit and wanting to recover losses—this 'gambling mindset' leads many into a vicious cycle.
Data shows that among users who trade more than 50 times a month, 92% eventually incur losses, partly due to the accumulation of fees eroding profits. Frequent trading not only increases costs but also raises the probability of making mistakes.
3. Survival rules of contract experts
After years of observation and personal experience, I have found that those who can survive in the contract market for a long time adhere to some simple yet effective principles:
Strict profit-taking and stop-loss are life-saving measures
Set clear stop-loss and take-profit lines for each trade; it is usually recommended that the stop-loss range be 2-3% of the principal, and the take-profit line be 5-8% of the principal. Do not be tempted by the idea of 'possibly missing a big market'—the market is never short of opportunities, but the principal only comes once.
Position management determines survival time
Each trade should not exceed 5% of total capital, and the number of positions held should not exceed 3. Use a phased entry strategy to diversify risk. Never invest all your funds in a single trade; this is the most basic survival rule.
Start with simulated trading and small capital
Before investing real money, at least conduct 1 month of simulated trading to familiarize yourself with trading rules and platform operations. Initial capital should not exceed 10% of total assets, and leverage should be controlled within 5 times. Do not envy those 'masters' flaunting high returns—they may just not have shown you their liquidation moments.
4. My personal opinion: Contracts are not a bad tool, but most people use them incorrectly
Many people see contract trading as a shortcut to quick wealth, but in fact, it is an investment tool that requires professional knowledge and strict discipline.
In my opinion, contracts are more suitable for experienced traders with risk tolerance; they are not suitable as the first lesson for beginners. If you do not understand the basic principles of Bitcoin and market volatility patterns, directly playing contracts is like a blind person riding a blind horse.
The cryptocurrency space is not short of 'get-rich-overnight' stories, but lacks traders who can continuously and stably profit. True contract experts are not those adventurers chasing hundredfold returns, but disciplined executors who can continuously control risks and earn steadily.
Conclusion: Rationally view contracts to go further
There are many temptations in the cryptocurrency world, and contracts are just one of them. Technology has liberated trading, and leverage has amplified human nature; this feast of code, desire, and capital is both an experiment in financial freedom and a touchstone for human greed.
If you decide to try contract trading, remember: the market is always there, and opportunities never disappear. But principal only comes once; protecting your principal is more important than pursuing profits.
I hope everyone can maintain their bottom line in a volatile market, trade rationally, and stay away from a 'gambling mindset.' After all, the ultimate goal of investing is not to get rich overnight, but to achieve stable asset appreciation.
Do you have any experiences or lessons in contract trading that you would like to share? Feel free to exchange in the comments section.
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