Recently, many traders have been complaining about one thing—despite correctly predicting the market direction, they hold their positions for four or five days, only to have over 1,000 dollars in funding fees deducted, and finally get liquidated. Then, the market suddenly takes off. This isn’t a problem with market judgment; it’s simply falling into the trap of the rules.

There are many people doing contract trading, but very few truly understand the game rules. Most only focus on the candlestick patterns and price movements, with no knowledge of the underlying cost structure. Today, we’ll discuss the three most common traps. Learning to avoid them will help you trade contracts more steadily.

**Trap 1: Funding Fees Are Silent Vampires**

This fee is charged every 8 hours. It seems insignificant, but it can eat up all your profits. When the rate is positive, long positions pay short positions; when negative, the opposite. The problem is, many people hold full positions long-term, and even if their market direction is correct, holding for too long causes the funding fee to grind down their account until liquidation, only to see the market start to move afterward.

How to avoid? First, stay away from periods where the rate exceeds 0.1% for two consecutive rounds. Second, try not to hold a single position for more than 8 hours. Third, if you’re confident in the direction but the funding rate environment is unfavorable, consider switching to the side that receives funding, and add to your position once the rate reverses.

**Trap 2: Miscalculating Liquidation Price Can Cost You Everything**

Many people only look at leverage multiples when calculating—thinking that a 10x leverage means a 10% drop will liquidate them. But in reality, they get liquidated after a 5% drop. Why? Because exchanges add transaction fees at liquidation, making the actual liquidation price much closer than your calculations suggest.

The solution is straightforward: never go full margin. Use isolated margin mode to separate each trade’s risk, keep leverage around 3-5x, and leave enough margin as a buffer. This way, even if the market fluctuates sharply, you won’t be caught off guard by sudden liquidation.

**Trap 3: High Leverage Is a Butcher’s Knife**

100x leverage looks sexy, but it hides unseen costs. Fees and funding rates are calculated based on the actual borrowed amount—even if your prediction is correct and you make a few hundred dollars, the fees might completely offset your profit or even cause a loss.

The core logic is simple: high leverage is only suitable for quick in-and-out short-term trades. Low leverage is the right choice for long-term holding. Never get carried away and jump into high leverage impulsively.

**Rules Are the True Test of Trading**

Many people think they lose money because they can’t predict the market accurately, but that’s not the real issue. Exchanges aren’t afraid of wrong predictions; they’re afraid of you not understanding the rules. Once you grasp the underlying logic of funding fees, liquidation mechanisms, and transaction costs, your profits will become much more stable. Instead of obsessing over market movements every day, spend time understanding these strategies.