This article is really worth a read for beginners...

#数字资产动态追踪 What's the real way out for contract trading? The conclusion I’ve come to after three years of blood, sweat, and tears

【The Life and Death Line of Exchanges】

I had a lesson in 2023 that I will never forget. At a small exchange without a comprehensive risk control mechanism, I took a long position on BTC, with an unrealized profit of +8000U. Then a sharp crash happened, and all the shorts were liquidated, but no one took the other side — the exchange’s handling was astonishingly bizarre. They simply traced back my profitable order to the historical price. What was the result? That +8000U instantly turned into -300U, almost wiping out my principal.

Since then, I’ve understood what ADL (Auto Deleveraging) really means. Basically, it’s the exchange’s safeguard: when the counterparty liquidates and no one takes the order, it automatically shrinks the profitable position proportionally, instead of letting your account go to zero. The first thing to look for in an exchange is this mechanism. I now ignore platforms without a proper ADL system.

【The Reverse Logic of Fees】

This is a point few people think about.

The fee structure for standard 20x contracts is like this: 0.02% for opening, 0.05% for closing. But what about 1000x contracts? 0.0002% for opening, 0.0005% for closing — 100 times lower.

Why are exchanges so “generous”? Because they know: you can’t hold a 1000x contract for long. They assume you’ll be liquidated quickly. Since you won’t last long, it’s better for them to collect a small fee upfront rather than multiple fees over time — statistically, they profit from this.

Funding fees in 1000x contracts are almost meaningless. Suppose the funding rate is 0.01%. Theoretically, with 1000x leverage, you pay 0.01%×1000=10% per hour. But in reality? 99% of 1000x positions can’t hold out for an hour, so your actual funding cost is nearly zero.

【The Binary Logic of Position Allocation】

This is the core logic I’ve summarized after many pitfalls.

For low leverage of 1-5x, I tend to bet big (more than 50% of my funds), because the risk is manageable, and I can withstand volatility.

For ultra-high leverage of 500-1000x, I bet very small (1%-10%), treating it as a probability game — if I win, I double my money; if I lose, I accept the loss.

What about the 50-100x leverage range? I avoid it completely. Why? Because this zone is the most awkward — a 2% move can wipe you out, but even if you close profitably, the gains are limited. It’s hard to achieve more than 10x returns. It’s neither safe like low leverage nor explosive like high leverage — the worst odds.

Many people, including myself, have been trapped in this range. Later, I realized that contract trading shouldn’t be a “moderate” game. Either control risk with low leverage for steady growth, or go all-in with high leverage — these two paths have clear profit models. The middle ground is a trap, driven by greed and fear.

Actually, the biggest lesson of these three years isn’t mastering some advanced technique, but understanding that the choice of exchange, fee structure, and position philosophy are the key factors for long-term survival. The rest — leave it to candlestick charts and mindset.