# Why Do Contracts Always Lead to Liquidation? Do You Really Understand Leverage?

Every day, people lose everything in contracts, yet more rush in afterward. Why? Frankly, most people haven't truly understood how contracts work.

They see platforms advertising 5x, 10x leverage and get excited, thinking they've opened a 5x position. Big mistake.

For example—if your account has 10,000 yuan, theoretically, you can withstand a 500 yuan loss. But what do many do? They immediately open a 30,000 yuan position, comforting themselves with "It's not a big deal." In reality? You're already playing with 60x leverage, and liquidation is just around the corner.

Experienced traders see clearly: this isn't gambling; it's risk hedging. The profits in your pocket, to put it bluntly, are leftovers from others' liquidations. The market is always transferring wealth—someone's stop-loss point is another's take-profit point.

How do professional traders operate? 70% of the time, they wait. Wait for the market to truly reach the right level. If it hasn't, they stay put. When they act, it's with a clear goal—to precisely harvest profits.

Want to survive and make money in contracts? You need to learn to go against human nature: when others are panicking and rolling on the ground, stay calm; when others are envious and greedy, stay calm.

The rules are harsh but simple—stop-loss must be an ironclad rule, with a single-loss limit of no more than 5%; when you make money, close the position decisively. The bottom line is that profit should be at least twice the loss.

Many say contracts are full of traps. I don't think so. The trap isn't the contract itself; it's your heart—one that can't handle losing, lacks a plan, and relies on feelings.