Trading contracts is not about predicting the market, but about understanding the rules. Many people get the direction right but still end up losing money because they get stuck in these unnoticed pitfalls.

Some time ago, a friend of mine was completely correct on the market direction and stubbornly held for four days, only to be drained of 1,000 USDT by funding fees, and finally got liquidated. When he closed his position, the market moved in his favor. This is not bad luck; it’s a complete lack of understanding of the game rules of contracts.

**First Pitfall: Funding Fees Are a Silent Harvesting Machine**

A contract account isn’t just about predicting rises and falls; funding fees are settled every 8 hours. Once the rate rises, it doesn’t matter if your prediction is correct—funding fees act like an invisible knife, slowly draining your profits. If the rate stays above 0.1% for several rounds, full position is basically suicide.

How to break this? Very simple—never hold positions with high funding rates for long. Aim to settle within 8 hours. If you can earn funding fees, don’t pay them.

**Second Pitfall: Liquidation Line Is Always Closer Than You Think**

Many believe that with 10x leverage, as long as the market doesn’t drop more than 10%, they won’t get liquidated. In reality, the platform also adds liquidation fees. The actual liquidation line is much closer than you think, and it looks like there’s still buffer room, but your position is already gone.

The solution is straightforward: don’t operate with full leverage; choose isolated margin mode, keep leverage between 3x and 5x, and ensure your margin has enough redundancy.

**Third Pitfall: High Leverage Is a Butcher Knife**

100x leverage sounds exciting, but fees and funding costs are calculated based on borrowed money. Winning a few times doesn’t mean you’re profitable; once you settle accounts, those costs will have eaten up all your profits.

High leverage is only suitable for ultra-short-term trading. To survive, rely on lower leverage.

Ultimately, trading platforms don’t care whether you make money or not; they’re afraid that you understand their rules. To survive in contract trading, you can’t just bet on market direction; the key is how well you understand these rules.

If you’re still blindly increasing leverage and taking reckless positions, stop first. Master these rules before re-entering the market; you’ll lose much less money.