Since ancient times, those caught in contracts have used low leverage. Do you know why? There's a saying called "boiling frogs in warm water," because with low leverage, you don't feel much, and you gradually get deeper into the trap. Then, as your position grows and you add more funds to average down, you become more and more trapped. The more you add, the deeper you get, and the more trapped you become. So, whether the leverage is high or low isn't the key; what's important is whether you set a stop loss. If you don't set a stop loss, who will blow you up? Do you agree?

Although low leverage seems to carry less risk, it's precisely because of the relatively mild volatility that people tend to relax their vigilance, just like boiling frogs in warm water—unconsciously, their positions get deeper and deeper. Many traders keep adding to their positions, resulting in increasing losses and eventual heavy damage.

The core issue isn't the size of the leverage but whether you strictly follow the stop loss discipline. Regardless of high or low leverage, not setting a stop loss is like driving without a seatbelt—when extreme market conditions hit, you're easily eliminated. Stop loss is the most important line of defense to protect your principal, allowing you to exit timely when your judgment is wrong and preserve most of your funds.

In contract trading, the key is to have a strict risk management mindset, set reasonable stop loss levels, and execute them decisively. This is the fundamental for long-term survival.

The essence of range trading is to predict that the price will oscillate within a certain range, profiting from buying low and selling high. But once the market breaks out of a trend—whether upward or downward—this dual-sided order strategy faces huge risks.

Why get trapped and die?

1. Wrong direction judgment: Long or short positions on one side will keep losing, while the opposite orders may not even execute, failing to hedge.

2. Averaging down trap: Many people keep adding to losing positions to reduce the average cost, resulting in deeper traps and heavier positions.

3. Liquidity exhaustion: In a trending market, rapid price movements may prevent stop orders from executing in time, causing slippage losses.

4. Psychological pressure: Watching losses grow, traders may develop a gambler's mentality, unwilling to cut losses, ultimately leading to liquidation.

The correct approach should be: if you want to do range trading, you must set strict stop losses. Once the price breaks the range boundary, admit your mistake and exit promptly, rather than stubbornly holding or continuously adding positions. At the same time, position management should be reasonable; don't over-leverage just because your leverage is low.