Opening the trading software to check the market, you can see red news about contract liquidations everywhere. Some people call this market a "cannibalistic" place, but still, new traders keep rushing in. Why? Because the market's best trick is to create an illusion of hope first.

I've seen too many people get confused right from the start by leverage multiples. Platforms display 5x, 10x leverage, making you think the potential returns are truly 5 times? Do the math and you'll see: with a $10,000 account, losing $500 will trigger a forced liquidation, but if you open a position of $30,000—on the surface, it looks like 5x leverage, but the actual risk factor has skyrocketed to 60x. This is not alarmist talk; it's basic mathematics.

Many people haven't truly understood the real purpose of contract trading. Treating it as gambling is the biggest trap. The real function of contracts is risk hedging, not speculation. The money you make in your account ultimately comes from the principal others lose when they get liquidated.

What do skilled traders do? They spend 70% of their time waiting, refusing to act unless market signals are clear enough. When the right moment comes, they strike precisely. This is completely different from most people who are just messing around in the market every day.

Taking Bitcoin as an example makes it even clearer. If you hold spot BTC but are worried about a price drop, you can simultaneously establish a short position to hedge. It's like buying insurance for your investment—when the market really falls, the gains from the short position can directly offset the losses in your spot holdings.

Ultimately, leverage itself is not the problem. The problem lies with the person operating the leverage.