2026-01-02 12:20:17

Why can small leverage lead to big risks? Ultimately, it's human nature messing things up.

Recently, a friend asked me: "Why do contracts get liquidated every day, and why are so many people rushing in?" This question took me back to my beginner days. At that time, I had $10,000 in my pocket, thinking that opening a 5x leverage position would be safe and steady. But what happened? I got liquidated twice in three days, and my account instantly shrank to $2,000.

Only afterward did I realize—what I called 5x leverage in words had actually turned into a 50x monster in practice. Slight market fluctuations turned me into a "liquidation regular."

Those who truly understand contracts have a mindset vastly different from us newbies. To them, contracts are not a game of betting on size, but a discipline of risk hedging. Every penny they earn isn't just made out of thin air—it comes directly from the wallets of those who get liquidated.

**Why are contracts so attractive?**

The answer is four words: leverage to amplify gains. Imagine you only have 1,000 dollars, and you open a contract with 100x leverage, instantly controlling $100,000 worth of Bitcoin. If the price of Bitcoin jumps 10%, you make $10,000. This kind of temptation is too much for most people to resist.

Spot trading only allows one-way operations—buy high, sell high. But contract trading is different—there's profit potential in both rising and falling markets. No matter which way the market moves, as long as you bet on the right direction, you can profit. Especially in a bear market, when others are losing heavily, you can profit by shorting. This contrast is an irresistible temptation for many traders.

Even more shocking is how fast contract trading can be. From opening to closing a position, it might only take a few minutes. This rapid feedback causes your brain to constantly release dopamine, making it impossible to stop.

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SatoshiHeir

· 2h ago

It should be pointed out that this article makes a fundamental cognitive error—it confuses human greed with the mathematical risks of leverage, which is clearly a misinterpretation of the essence of risk management. On-chain data shows that the real issue for liquidated traders is not the leverage multiple itself, but the lack of position management. Based on the Kelly criterion, at any leverage level, stop-loss discipline is the line between life and death. The "5x turning into 50x" mentioned by the author is not a fault of leverage, but a self-destructive behavior when there are no risk boundaries. Let me say this: dopamine addiction mechanisms do exist, but this is not the original sin of the contract—it's a human weakness that everyone must self-examine. True traders have long proven that leverage is an neutral tool; the key is whether you have the courage to press the stop-loss button. Laughs, another viewpoint that confuses tools with users.

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NeverVoteOnDAO

· 3h ago

Bro, I told you, playing with 5x leverage and ending up with 50x, isn't that us? Mental preparation and actual operation are always two different things. Basically, it's greed, itchiness, dopamine addiction—once you start, you can't stop. The money flowing out of the liquidated trader’s wallet—this hits hard. Trading contracts is a zero-sum game; for someone to win, someone has to lose. Really, fast speed and quick feedback are the biggest poisons. If you can't react in time, you'll lose. The temptation of making a small bet for a big gain—who can resist? That's why every day, people jump into the fire pit.

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MiningDisasterSurvivor

· 3h ago

I've experienced it all—playing with 5x leverage and turning it into 50x. To put it simply, it's a greed-driven dopamine trap. How many people died in the 2018 mining disaster, and we're still repeating the same mistakes.

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WenMoon42

· 3h ago

It's the same old story, basically just greed causing trouble.

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FarmHopper

· 3h ago

Haha, it's the same old trick again. 5x leverage turns into 50x. I’ve been caught by this too. Just thinking about it makes me angry. Back then, I was just reckless, and as a result, half of my account was wiped out. Really, contracts are designed to harvest the leeks. The dopamine trap is unavoidable for everyone. But some people still make money. If you're lucky... but most likely, you're still being played. This part hits too close to home, it's about me.

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