Among those who trade derivatives, the ones who lose the most often see the right direction but still end up with zero. It sounds magical, but this happens every day. The root cause isn't market judgment, but rather a fundamental misunderstanding of those seemingly insignificant contract trading rules—rules that quietly can eat away at your account.

Recently, a fellow trader who copies trades came to me complaining. He held a position for nearly a week, never deviated from the correct direction, but still lost over a thousand dollars in funding fees, and in the end, couldn't avoid liquidation. When he closed the position, the market suddenly took off. It was purely a mistake caused by not understanding the rules.

There are actually only three deadly pitfalls in contract trading, and hitting any one of them is enough to make you suffer.

**First Pitfall: Funding Fees**

This is the most insidious. Holding a contract position is never free; the system settles funding fees every 8 hours. When the rate is positive, longs pay; when negative, shorts pay. Many people hold full positions and stubbornly resist, seemingly never approaching liquidation, but their account balance is gradually drained by funding fees. How to deal with it? Very simple—when the rate is especially high, don’t hold on; never cross multiple settlement periods with a single position. If you’ve guessed the right direction, try to be on the side that earns funding fees.

**Second Pitfall: Liquidation Line**

You might calculate a theoretical liquidation point in your head, but the exchange’s actual liquidation price plus fees is not at the same level. Often, it looks like the price only drops a little, and suddenly the position is gone. To prevent this tragedy, two key points: never operate at full margin; prioritize using isolated margin mode. Keep leverage between 3x and 5x, leaving enough buffer for the margin.

**Third Pitfall: High Leverage**

High leverage looks like a pie, but in reality, it’s a meat grinder. The higher the leverage, the exponentially greater the costs from fees and funding. Many people find that their direction was correct, but due to high costs, they can’t turn a profit.

In short, contract trading is not just about betting on rise or fall; it’s a real contest of understanding and controlling the rules. Master the rules, avoid these pitfalls, and you might survive in the market. Only by staying alive can you have the chance to talk about profits or even doubling your investment.