Honestly, most people get mesmerized by the idea of leverage when trading derivatives and never really understand the underlying logic.

Seeing platforms advertise 5x, 10x leverage, they think they are opening positions with those multiples, but little do they know, the trap is deep. For example: if you have 10,000 USDT in your account, your maximum loss is 500 USDT. Yet, you open a position with a nominal value of 30,000 USDT. On the surface, the leverage doesn't seem high, but when you calculate the margin ratio, the actual leverage approaches 60x. This is not trading; it's outright gambling, and people still believe their positions are rock solid.

People who truly understand the game never treat derivatives as gambling tools. What is the core use of derivatives? Hedging long and short risks, locking in spot price fluctuations. The essence of the derivatives market is zero-sum; every dollar you earn is basically taken from someone else's liquidation loss.

See how professional traders operate: 70% of the time is spent waiting. Waiting for what? Waiting for entry signals. If the price hasn't reached the preset level, they stay put; when the signal appears, they act precisely. What about ordinary retail traders? They frequently place orders, chase highs and sell lows, never stopping.

Making money with derivatives boils down to six words: against human nature, quantifying risk. When others panic, you need to calmly control your position; when others greedily add leverage, you should proactively reduce your position. Stop-losses must be strictly enforced, with each loss not exceeding 5% of the account. When profitable, take quick profits at a minimum 2:1 risk-reward ratio. Don’t think about soaring to the moon.

Liquidation is not the fault of derivatives; it’s the fault of blindly following the trend. Experts make money by quantifying risk; those who trade based on feelings should give up early. Instead of staying up late watching the market, it’s better to sleep early and be at ease.