The pitfalls in contract trading are often much deeper than you imagine.

Recently, I saw someone complain that they clearly predicted the market direction, but after holding the position for four days, they were charged over 1000U in funding fees, and in the end, they couldn't withstand the liquidation. Ironically, after closing the position, the market shot straight up... This kind of thing is something anyone who has traded contracts has probably experienced—the feeling of powerlessness.

To put it simply, this is "losing due to the rules, not due to the market."

Many people only focus on the candlestick patterns and price movements, without understanding the underlying game mechanics. Today, I will break down the three most common pitfalls. By avoiding these traps, your contract trading can go smoother and less detoured.

**Pitfall 1: Funding Rate, Secretly Harvesting While You Sleep**

Many traders keep their eyes glued to the candlestick charts, completely unaware that the funding fee is quietly draining their funds in the background.

Funding fees are settled every 8 hours. When the rate is positive, longs pay shorts; when negative, the opposite.

For example: You are fully long BTC, the direction is correct, but after holding for two days, your account has been drained of hundreds of dollars in funding fees. If you can't endure it anymore, you get liquidated. And what happens? The market suddenly surges. That frustration is hard to put into words.

How to avoid this pitfall? First, stay away from crazy periods where the funding rate exceeds 0.1% for two consecutive cycles—that's when holding costs become unreasonable. Second, don't hold a single position for more than 8 hours; if you can enter and exit quickly, do so. Third, when the market trend is clear, prioritize being on the side with negative funding rates, so the fee actually pays you.

**Pitfall 2: Liquidation Price, Not the Line You Calculated**

This is the easiest trap to fall into. Many think that with 10x leverage, a 10% drop will liquidate them, but in reality, it can happen at just a 5% decline.

The reason is simple: the platform adds liquidation fees when calculating the liquidation price, so the actual liquidation point is much closer than your manual calculation.

What to do? First, avoid full position sizing; switch to "isolated margin" mode so that losses on one position are isolated and won't affect your entire account. Second, keep leverage between 3-5x; don't chase high multiples. Third, reserve enough margin to increase the distance to liquidation.

**Pitfall 3: High Leverage is an Invisible Killer**

100x leverage sounds exciting, but it hides big risks—the fees and funding costs are calculated on the total borrowed amount.

You might be right on the market direction and make a few hundred dollars, but when it comes time to settle, the combined fees and funding costs can wipe out your profit, or even cause a loss. That’s the real danger of high leverage.

Remember this principle: high leverage is only suitable for quick in-and-out trades; low leverage allows for safer holding. The higher the leverage, the greater the risk. Don’t get carried away by others’ profits and blindly follow.

Exchanges aren’t afraid of you betting on the right direction; what they truly fear is that you understand these rules.

To survive and earn steadily in the contract market, you must not only read the market trends but also master these rules. Don’t be blinded by superficial excitement—stay calm and analyze carefully, that’s the long-term strategy.