Today, let's talk about the pitfalls of contract trading.

Recently, a fan left me a message saying they correctly predicted the direction but held onto their position for four days, incurring a funding fee of 1000U, and ultimately faced liquidation. After closing, the market took off...

This is a typical case where the fault lies in the rules, not the market.

Are you clear about the true game rules of contracts, or are you just focused on the ups and downs?

Let me analyze several common pitfalls for you. By avoiding these, your journey in contract trading may be more stable.

The first pitfall: Funding fees quietly draining your wallet.

Many people only focus on the K-line in contract trading, failing to notice that funding fees are quietly being harvested.

Funding fees are charged every 8 hours, based on the direction of your long or short position.

When the rate is positive, longs have to pay shorts.

When the rate is negative, shorts have to pay longs.

For example, going all in on a long position, the direction was right, but holding on for too long led to funding fees costing several hundred U over two consecutive days. As a result, they were liquidated, and the next day the market took off, which is extremely painful.

Pitfall avoidance suggestions:

Avoid high funding fee periods (when the funding fee exceeds 0.1% for two consecutive rounds).

Control your holding time; ideally, do not exceed 8 hours.

If the direction is clear, try to take the side with the opposing funding fee.

The second pitfall: The liquidation price is not the line you calculated.

Many friends believe that with 10x leverage, a 10% drop will lead to liquidation, only to find that they were liquidated after a 5% drop.

Why?

Because the platform adds a liquidation fee, making the liquidation line closer than you calculated.

Solutions:

Do not go all in; use the "isolated margin" mode to protect the overall position.

Control leverage between 3 to 5 times to avoid high leverage risks.

Leave enough margin to automatically extend the liquidation distance.

The third pitfall: High leverage = slaughter knife.

The seemingly exciting 100x leverage actually hides many costs.

Fees and funding fees are based on the "borrowed" funds. Even if your direction is correct and you've made several hundred U in profit, the fees and funding fees at settlement might result in a loss.

Suggestions to remember:

High leverage for short trades, low leverage for long holds.

The higher the leverage, the greater the risk; do not act impulsively.

It's not that you can't do it; it's that you don't understand the rules.

Exchanges are not afraid of you losing money; they are afraid of you understanding their "tricks."

Want to survive and make money? Don't gamble on direction; gamble on the rules.

If you want to navigate the crypto world more steadily, follow me, avoid these pitfalls, and save yourself from detours!