In the futures market, liquidation is never accidental, but a consequence of inadequate risk control. To survive long-term in volatility, remember the following core principles, replacing luck with discipline:
1. Leverage and Position: Put shackles on risk
Core Logic: Staying alive is more important than making quick profits
Leverage Control: Beginners start with 3-5 times, experienced traders should be cautious with leverage above 10 times, as each time of leverage amplifies emotions;
Position Management: Do not exceed 20% of total capital for a single position, leaving 80% ammunition to deal with black swan events, rejecting the gambler's mentality of 'fully invested'.
2. Stop Loss Iron Rule: Recognizing mistakes and exiting is an essential skill
Survival Bottom Line: Stop loss is buying insurance for the account
Set a stop loss when opening a position, controlling the range within 3-5%, using small losses to exchange for the potential of a big trend;
If the stop loss line is broken, exit decisively; resisting will only turn a 'minor injury' into 'liquidation amputation'; the market will always provide opportunities for re-entry.
3. Forced Liquidation Red Line: Beware of the system's sickle
Key Observation: The forced liquidation price is the last line of defense
Monitor the forced liquidation price of positions at all times; when it is within 5%-10%, add or reduce positions in advance;
Reject mindless position increases; counter-trend adding positions is like handing a match to a powder keg, prioritize reducing positions to lower risk.
4. Emotional Management: Refuse to be a slave to dopamine
Psychological Tactics: Profit is a byproduct of rationality
Pause operations after losses to avoid the 'revenge trading mentality' leading to chain liquidations;
Go with the trend; do not chase highs or lows in volatile markets, do not stubbornly resist in a one-sided trend; the market will not change direction just because you refuse to give in.
5. Hedging Strategy: Use spot to hedge contract risks
Advanced Techniques: Balance long and short to reduce volatility impact
When holding spot for the long term, a small amount of reverse contracts can be opened to hedge short-term risks (e.g., when holding BTC, open a short with 10% of the position to counter a pullback);
Hedging is not speculation; leverage should be controlled within 5 times to avoid hedging turning into gambling.
6. Currency Selection: Stay away from dancing on the edge of a knife
Safety Principle: Mainstream coins are a risk buffer
Focus on major coins like BTC and ETH; small coins often have volatility exceeding 50%, with liquidation possible in just a few minutes.
In extreme market conditions (such as spikes or waterfalls), proactively reduce leverage to below 3 times to avoid a liquidity crisis triggering a chain explosion.
7. Gradual Position Building: The wisdom of trading time for space
Operating Philosophy: Diversified entry to smooth the cost curve
Reject one-time full positions, build positions in 3-5 batches with clear trend verification conditions between each batch;
In a downtrend, gradually increasing positions requires strict bottom position setting to avoid falling into a bottomless pit of 'buying more as it drops'.
Ultimate Warning:
The eternal enemies of contract trading are 'heavy positions, anti-single, and emotional'. Remember: the market lacks stars, but not long-lived ones. Replace impulse with discipline and use probability to combat randomness, so that you can navigate the bull and bear cycles in cryptocurrency.
— Controlling risk is not a compromise, but a means to preserve strength for the next attack.
I need fans, you need references. Guessing is not as good as paying attention.
