High leverage is a dance on the edge of a cliff, seemingly beautiful, but the next step may lead to an abyss.
A fan who trades contracts messaged me: "Senior, I want to open 100x leverage and make a move."
I replied to him: "Brother, don't rush. I entered the market in 2017, and I've already cut the grass on the grave more than a dozen times. Listen to my story before taking action."
My liquidation story: that rainy night in 2019
One night in 2019, I went long on Bitcoin with 50x leverage. In the first five minutes, my unrealized profit was 30%, and I felt like I was about to reach the peak of life. Just then, a rumor about "mining farms being inspected" suddenly surfaced, and the market instantly plummeted, causing my stop-loss order to directly become a market liquidation.
Six figures of capital can vanish in five minutes.
That night, I completely understood: contract trading is not investing, but rather roulette under the mask of crypto. What’s harsher than a casino is that this casino can remotely control the speed of the wheel.
The truth you cannot see: survivor bias and behind-the-scenes tricks.
"But I see someone in the group turn 100,000 into 10 million..." This is something every beginner will say.
You only see the profit screenshots of turning 100,000 into 10 million shared in the group, but you don’t see the 9999 account records marked 'user has been canceled' in the background. Exchanges are used to putting profit charts on top while stuffing loss cases into a black box; this is what is called survivor bias.
This is a zero-sum game; your opponents are quantitative funds, market makers, and insiders who can see your cards. Some have revealed that certain platforms not only entice investors to participate in high-leverage investments but may also manipulate prices in secret. Your win rate is already below 50%, and with hidden costs like funding rates and liquidation spreads, playing long-term will naturally bury you in a pit of mathematics.
The illusion of stop-loss and human weaknesses
"So if I set my stop-loss and take-profit levels strictly, will it work?" It sounds wonderful, but reality is harsh.
Stop-loss is against human nature: just when you get knocked out, it rebounds; after being hit three times in a row, on the fourth time, you will definitely think, 'Let’s wait and see.' Then, a black swan will swallow you whole. Spot can drop by half and still play dead, but liquidation in contracts is true death.
In a high-leverage environment, small price fluctuations are amplified. For example, with 10x leverage, a 10% price fluctuation can double or wipe out your principal. Under pressure, normal people can turn into 'monkeys' chasing price spikes; when the money is gone, the mindset is ruined too.
The truth for experts: leverage is a tool, not a printing press.
"Are there no experts who achieve financial freedom through contracts?"
Indeed, some experts make a living through contracts, but they treat contracts as tools rather than 'printing presses': using small positions to hedge spot or engage in market-making arbitrage, profiting from volatility spreads, never going all-in.
True leverage artists establish strict guidelines for using leverage: reduce leverage during high market volatility, moderately increase it when trends are clear; always leave buffer space for extreme market conditions. They study the Kelly formula and black swan insurance, rather than believing in metaphysics like 'one bullish candle piercing three lines.'
In a bull market, holding spot assets yields enough beta profits, so there’s no need to use leverage to steal alpha, which can easily lead to self-destruction.
If you must play: three life-saving rules.
You can engage with contracts, but be sure to remember these three rules:
Only gamble what you can afford to lose; consider it buying skins for a game; delete the app immediately after losing, don’t think about recovering your losses; never use living expenses, mortgage, or your wife’s money at the table.
Exchanges are not afraid of you winning; they fear you not playing. As long as you stay long enough, probability and transaction fees will write the ending for you. Data shows that on May 19, the day Bitcoin plummeted, liquidated funds exceeded 40 billion yuan, involving about 700,000 people.
Conclusion: farming or picking chestnuts from the fire, you choose.
Spot is farming; choose good seeds and patiently wait for the rainy season; contracts are picking chestnuts from the fire; prepare for burns, and only take once. Don’t turn yourself to ashes while counting money for the big players.
Leveraged DCA, perpetual contracts, grid trading—these flashy strategies are essentially double-edged swords. Experienced traders reduce leverage during significant market fluctuations, never exposing themselves to the risk of catastrophic loss.
If you still won't listen to advice, at least keep your leverage ratio within 3 times; this is the last piece of advice for beginners.
In the leveraged market, there are no immortals, only 'survivors' who have lived longer.
Once we hit over a hundred likes, I’ll share how to identify signs of market manipulation by insiders to help you avoid those obvious pitfalls. Follow Xiang Ge to learn more firsthand information and precise points in the crypto world; learning is your greatest wealth!#ETH走势分析 #加密市场观察 $ETH
