Been active in the crypto market for years, seeing too many people make big profits and big losses in contracts. I’ve always held a view: contracts are like a sword-wielding martial artist—if used well, they can help you reach the sky in a single step; if used poorly, they can bleed you dry immediately. Today, I won’t delve into any deep theories, just share some of the pitfalls I’ve stepped into.

First, what are contracts—simply put, they are a magnified version of spot trading. You don’t need to actually own Bitcoin; as long as you predict the right direction of price movement, you can profit. But here’s the double-edged sword: leverage. It’s both a tool to amplify gains and a trap. For example: using 100U with 10x leverage to go long on BTC, a 10% increase means earning 100U and doubling your money; conversely, a 10% drop will wipe out your entire principal.

The key point is, profits in contracts don’t come from technical analysis but from your judgment of market rhythm and your emotional control.

Next is the funding rate, a detail often overlooked by beginners. It settles every 8 hours, like a "ceasefire fee" between bulls and bears. A positive funding rate (longs pay shorts) indicates the market is overly bullish, and chasing longs at this time can easily lead to being caught off guard—remember when BTC was pushed up recently, the rate once surged to 0.1%, then quickly pulled back. A negative funding rate indicates bears are in control, and blindly bottom-fishing can be risky. My approach is: when the funding rate stays in the same direction for a while, reversing your position can have a higher success rate. For example, if the rate is continuously positive, I try a small short position.

Finally, about leverage multiples—beginners should never play with high leverage. I’ve seen too many people addicted to the thrill of 10x or 20x leverage, only to be wiped out in a single market move.