Contract trading may seem simple—guess the right direction and make money. But reality is often more brutal.

Recently, I saw a case where a trader's prediction was completely correct, but they held their position for four days and were charged 1000U in funding fees, ultimately forced to liquidate. The next day, the market took off. It’s not that they misread the market, but that they were trapped by the rules.

Many people only focus on candlestick charts but ignore the true game rules of contracts. Today, let’s discuss some of the most common pitfalls.

**Pitfall 1: Funding Fees Are Invisible Scalpers**

Few people pay real attention to funding fees. They settle every 8 hours, automatically charged based on the long-short position ratio. When the rate is positive, longs pay shorts; when negative, the opposite.

Suppose you are fully long and correct in direction but hold the position continuously. Over two days, the funding fees can eat up several hundred dollars. Eventually, insufficient margin leads to liquidation. The next day, the market surges, leaving you speechless.

How to avoid? Control your holding time—don’t hold longer than 8 hours. When you see two consecutive periods with funding rates above 0.1%, reduce your position or exit. If the market is clear, try to take the opposite side of the funding rate so that fees become profit rather than cost.

**Pitfall 2: Liquidation Price Is Not Just That Line in Your Head**

When calculating the liquidation point, many only consider leverage and loss percentage. With 10x leverage, they think a 10% drop triggers liquidation, but in reality, it happens after a 5% drop.

The reason is simple: the platform’s liquidation line includes liquidation fees. Your calculated liquidation distance is actually short of the real liquidation line.

A straightforward way to defend: don’t operate at full margin. Use isolated margin mode to contain risk. Keep leverage between 3x and 5x, leaving enough margin buffer. The more margin you have, the farther the liquidation line is from the current price.

**Pitfall 3: Hidden Costs Behind High Leverage**

100x leverage sounds exciting, but fees and funding costs are calculated based on the actual borrowed amount. You might see a profit of a few hundred dollars, but after settlement, fees and funding costs can turn that into a loss. It’s not that you did something wrong; high leverage eats up all your profits.

The core logic is: high leverage is for quick in-and-out trades; low leverage is for holding longer cycles. The higher the leverage, the greater the risk—don’t be impulsive.

**Final Words**

Exchanges aren’t afraid of you losing money; they’re afraid of you understanding the rules. To survive longer in the crypto space, instead of betting on market direction, first understand these invisible rules. Avoid pitfalls, and you’ll naturally trade more steadily.