Behind the jumping numbers on the screen are countless sleepless nights and a heart hanging in suspense.
“I blew up again.” At three in the morning, after receiving this text message, I knew that my friend Li Ye's contract account had hit zero again. This is already the seventh time he has gone bankrupt this year. Once, he had a maximum floating profit of 60 million, but now he is in debt by over a million. He is not an isolated case.
As an analyst who has been in the crypto world for many years, I have witnessed too many similar stories. Today, I want to set aside technical jargon and talk plainly about the real side of contract trading—not to teach you how to make money, but to tell you how to survive.
01 Leverage, the sweet poison
"Using 10,000 to leverage 1 million!" Such promotional slogans are everywhere on contract trading platforms. Newcomer Li Xin just entered the market and experienced this thrill, achieving a return of 14.67% within ten seconds under 20 times leverage, and the yield soared to 27.86% after fifty minutes.
The feeling of getting rich instantly is more addictive than any stimulant.
The problem is that this addiction can lead one deeper and deeper. From 5 times to 50 times, and then to 100 times, the leverage multiplies unknowingly. I've seen too many people start cautiously, make a little money, and then feel like geniuses, increasing their leverage until one fluctuation wipes out all profits along with the principal.
The essence of leverage is to use your small capital to borrow large amounts from the exchange. Winning is indeed exhilarating, but you must also be able to afford the losses. Many platforms offer leverage of up to 125 times, which means that with price fluctuations of less than 1%, your principal could disappear entirely.
02 Psychological traps in contract trading
Why do smart people also stumble in contract trading? The answer lies in the weaknesses of human nature.
The gambler's fallacy is the most common psychological trap. Many people think that after a continuous decline, there will definitely be a rebound, or after a continuous rise, there will inevitably be a correction. So they keep increasing their positions during a crash, only to see the market continue to drop until they are liquidated.
"Hot hand effect" is another trap. I once witnessed a friend correctly guess the direction twelve times in a row, overflowing with confidence, and began to operate heavily. As a result, in the thirteenth trade, he lost all previous profits plus one-third of his principal.
The most deadly aspect is that contract trading platforms operate 24 hours a day, which leads many people into an inescapable situation. Watching the market during the day and staying up all night to keep an eye on it, their mental state remains tense for a long time, and their judgment will naturally decline.
03 Those bloody real cases
Zheng Dawei from Dalian made a fortune in 2017 but lost over 20 million in contract trading, ultimately leading him down a path of no return. His story, while extreme, reflects the risks of contract trading truthfully.
My friend Li Ye's experience is more universal. He once made a profit of several million through the "Hundred Times All-In Strategy" during the cryptocurrency market crash in March 2020, but because he wanted to multiply his investment by ten without withdrawing, he ended up liquidating his long position, losing not only his profits but also a property in Nanjing.
Even the well-known options trading master James Cordier was not spared. He sold naked call options on U.S. natural gas without any hedging and faced liquidation when natural gas prices skyrocketed, losing not only his principal but also owing margin to the broker.
04 Exchanges, the eternal winners
While you are obsessed with the long and short game, the exchange is steadily making money. Whether you profit or lose, the exchange will charge fees. On platforms like OKEx, the fee for each contract trade can be as high as 0.07%.
What’s even scarier is that some small exchanges even gamble against users. Your losses are their profits. Some users have found that when they are making money, the exchange often refuses to allow withdrawals under the pretext of 'risk control', and when profits are lost, the withdrawal function miraculously resumes.
Exchanges also attract retail investors through 'signal teachers.' These 'teachers' claim to have insider information, but they are likely just bait to draw you in. They earn commissions, so they naturally do not care about your profits or losses.
05 Survival rules for the clear-headed
After years of observation and personal experience, I have summarized a few survival rules:
First, only play with money you can afford to lose. If you worry that losing this money will affect your life, it should not enter the contract account. My personal principle is that contract funds should not exceed 5% of liquid assets.
Second, position control is a lifeline. Among the surviving traders I encountered, most do not open positions exceeding 5% of their principal at a time. Even in the face of sudden market fluctuations, there is room for maneuver.
Third, set a clear exit bottom line. I set a rule for myself: if daily losses reach 10% of the principal, immediately stop trading, and trade no more than three times a week. This discipline has saved me multiple times from dangerous situations.
The most important thing is to never believe in a strategy that guarantees profits. In the face of the market, staying humble is the key to longevity.
Contract trading is essentially a game of risk transfer. Retail investors fantasize about defeating the market, while exchanges and institutions steadily earn fees. A few lucky ones may shine for a moment, but in the long run, most participants will ultimately become targets for harvesting.
The screen is still flickering, and the numbers keep changing. But for me, being alive is more important than making money. In this never-ending game, survival itself is a victory.
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