Three Major Truths That Disrupt Cognition

Leverage ≠ Risk: Position Size is the Lifeline

With 100x leverage and using a 1% position, the actual risk is only equivalent to 1% of a full spot position. A certain student used 20x leverage to trade ETH, investing only 2% of their capital each time, and had no liquidation record for three years. Core formula: Actual risk = Leverage × Position Ratio.

During the 312 crash in 2024, the common characteristic of 78% of liquidated accounts: Losses exceeded 5% without setting a stop-loss. Professional traders have a rule: Single trade losses should not exceed 2% of capital, equivalent to setting an "electrical fuse" for the account.

Rolling Positions ≠ All-in: The Correct Way to Compound

Step-by-step Position Building Model: First position at 10% for trial and error, add 10% of profits for additional positions. With a capital of 50,000, the first position is 5,000 (10x leverage), and every time there’s a 10% profit, add 500. When BTC rises from 75,000 to 82,500, the total position only expands by 10%, but the margin of safety increases by 30%. Institutional-level Risk Control Model

Dynamic Position Formula

Total Position ≤ (Capital × 2%) / (Stop-loss Margin × Leverage)

Example: With 50,000 capital, 2% stop-loss, and 10x leverage, the maximum position calculated is = 50000 × 0.02 / (0.02 × 10) = 5,000

Three-stage Profit-taking Method

① Close 1/3 at 20% profit ② Close another 1/3 at 50% profit ③ Move stop-loss for remaining position (exit if it breaks the 5-day line)

In the 2024 halving market, this strategy increased 50,000 capital to over a million in two trends, with a return rate exceeding 1900%.

Hedging Insurance Mechanism

When holding positions, buy Put options with 1% of the capital, which can hedge 80% of extreme risks. During the Black Swan event in April 2024, this strategy successfully saved 23% of account net value.

Deadly Trap Empirical Data

Holding a position for 4 hours: Probability of liquidation increases to 92%

High-frequency trading: Average 500 operations per month results in a 24% capital loss

Profit Greed: Failure to take profit in time leads to an 83% profit retracement

Four, Mathematical Expression of the Essence of Trading

Expected Profit = (Winning Rate × Average Profit) - (Losing Rate × Average Loss)

When setting a 2% stop-loss and a 20% profit, only a 34% winning rate is needed to achieve positive returns. Professional traders achieve annualized returns of 400%+ through strict stop-loss (average loss 1.5%) and trend capture (average profit 15%).

Ultimate Rules:

Single loss ≤ 2%

Annual trades ≤ 20

Profit-loss ratio ≥ 3:1

70% of the time in cash waiting

The essence of the market is a probability game; smart traders use 2% risk to seize trend dividends. Remember: Control losses, and profits will naturally run. Establish a mechanical trading system to replace emotional decision-making with discipline for sustainability.