Today I want to talk to everyone about the pitfalls of contract trading.

Recently, some fans left me messages saying they saw the right direction, but held their positions for four days and were charged $1,000 in funding fees, eventually getting liquidated.
After closing the position, the market took off...
This is a classic case of being wrong about the rules, not the market.
Just focusing on price movements, do you understand the true game rules of contracts?
Let me analyze a few common pitfalls for everyone. Avoid these, and your contract trading journey might become more stable.
First pitfall: Funding fees, quietly draining your wallet.
Many people only look at candlestick charts when trading contracts, but fail to notice the funding fees quietly harvesting profits.
Funding fees are charged every 8 hours, based on your long or short position.
When the rate is positive, longs pay shorts.
When the rate is negative, shorts pay longs.
For example, going full long with the correct direction, but holding on through two days of funding fees, paying hundreds of dollars, and ending up liquidated. Then the next day, the market skyrockets, which is very painful.
Tips to avoid the pit:
Avoid high-fee periods (when funding fees are above 0.1% for two consecutive rounds).
Control your holding time, ideally no more than 8 hours.
If your direction is clear, try to be on the side that benefits from opposite funding fees.
Second pitfall: The liquidation price is not the line you think it is.
Many traders think that with 10x leverage, a 10% drop will liquidate them, but find out that the platform liquidates at only a 5% drop.
Why?
Because the platform adds liquidation fees, making the actual liquidation line closer than your calculations.
Solution:
Don’t go full margin; use isolated margin mode to protect your overall position.
Keep leverage between 3x and 5x to avoid high leverage risks.
Leave enough margin to automatically extend the liquidation distance.
Third pitfall: High leverage = a slaughter knife.
The seemingly exciting 100x leverage actually has many hidden costs behind it.
Fees and funding are calculated based on the “borrowed” funds. Even if your direction is correct and you make hundreds of dollars, the final settlement might show losses due to fees and funding costs.
Remember:
High leverage for short-term trades, low leverage for long-term holds.
The higher the leverage, the greater the risk. Don’t be impulsive.
It’s not that you don’t know how to trade, but that you don’t understand the rules.
Exchanges aren’t afraid of you losing money; they’re afraid you understand their “tricks.”
Want to survive and make money? Don’t bet on the market direction, bet on the rules.