Contract losses are nine out of ten times due to not fully understanding the rules. This may sound harsh, but it's true.

Recently, a friend of mine complained to me that they had the right market direction, endured four days of holding positions, and what happened? Fees kept being deducted round after round, and they ended up losing 1,000 USDT. Before closing the position, they kept cutting losses, only for the market to take off right after. Such incidents are all too common.

The problem isn't your market judgment; the issue lies in the fact that the contract system has many hidden costs that eat into your profits. Without understanding these, even the correct direction is useless.

**First Pit: Funding Fees, the Most Easily Overlooked Hidden Cost**

Funding fees are settled every 8 hours, and the platform charges based on the current long-short ratio. The rate can be positive, meaning longs pay shorts; or negative, meaning shorts pay longs.

Many traders hold full positions and tough it out, thinking as long as their direction is correct, it's fine. But after several rounds, funding fees slowly cut into your profits like a dull knife. Eventually, you're forced out, only for the market to move in your favor immediately after. Crazy, right?

How to avoid this pit? Don't hold positions through periods of especially high funding fees. If possible, choose to be on the side where the fee rate is positive and the platform pays you. Also, a key point—don't keep your orders open too long. The longer your position is held, the more terrifying the hidden costs become.

**Second Pit: Liquidation Price, the 10x Leverage You Think You Have Is Not Really 10x**

Many beginners think that using 10x leverage means a 10% drop will liquidate their position. That's overly naive.

The actual liquidation price is closer because exchanges include liquidation fees in their risk calculations. Your account balance may look sufficient, but the real liquidation point is much nearer.

The solution is straightforward: don't operate at full margin. Prefer isolated margin mode, keep leverage between 3x and 5x, and leave enough margin buffer. That small profit margin may seem insignificant, but it can save your life in emergencies.

**Third Pit: High Leverage Looks Exciting but Is Basically Suicide**

The temptation of high leverage is strong, but behind it lies higher transaction fees and funding costs. Even if your market direction is perfect, these costs will eat into your profits at settlement.

Remember this rule: high leverage is only suitable for short-term trading. For longer positions, you must honestly reduce leverage. Many people don't lack the ability to trade contracts; simply put, they haven't fully understood these rules.

The exchange's design logic is clear—they're not afraid of your wrong market judgment; what they truly fear is that you understand the entire mechanism. To survive in the contract market, don't just focus on price movements—master these rules first.

Avoid these pitfalls, and you'll naturally pay less tuition.