Last week I met an old friend, and he told me he finally crawled out of the contract trading hell.

Last month, when Bitcoin was consolidating around $90,000, he got impulsive and opened a 5x leveraged long position. A 3% drop? No problem, he could handle it. But then there was a sudden crash in the middle of the night, and his $80,000 was wiped out instantly—he didn’t even get a chance to appeal.

Yesterday, the same drama happened again.

I just checked Coinglass data: in the past 24 hours, 574,000 people got liquidated in the contract market, and $1.725 billion vanished just like that. For Bitcoin contracts alone, $184 million was liquidated.

A lot of people think contracts are a fast track to making big money with small capital, but they don’t realize that at least half of those hundreds of percentage points they’re chasing come from the blood left by others being liquidated.

If you buy spot and make a mistake, at worst you can just hold and wait it out. But if you add leverage and stubbornly hold on in contracts? That’s just giving your money away to others.

Now, that friend has learned his lesson. Every time he opens a position, he sets an 8% stop loss. Last week, when Bitcoin dropped to $86,000, he hit his stop loss and only lost a few thousand bucks. As soon as a rebound signal appeared, he jumped back in, and not only made back his losses but even earned a bit.

The people who survive in this industry the longest often do the opposite: most of the time they sit on the sidelines, watching like a hunter lying in wait. One time I saw him staring at the charts for two hours without making a single trade. I asked why he wasn’t doing anything, and he said, “If there’s no signal, just wait. Better than blindly trading and getting liquidated.”

It’s just like boxing—those who start swinging wildly get knocked down first. The key is to assess the situation before making a move.

Contract trading, on the surface, is just buying and selling, but it’s actually a lot like flying a plane—stop loss is your brake. If you don’t know how to brake and just speed ahead, you’ll crash sooner or later.

It’s not that beginners shouldn’t touch contracts, but you have to master the basics first. After all, the market won’t go easy on you just because you’re new.