The Iron Rule of No Liquidation in the Crypto Market!

This low-risk principle, which condenses 8 years of trading experience, will change your perception of contract trading. Liquidation is never the market's fault, but rather a mine you have planted yourself.

Three Major Misconceptions:

1. Leverage ≠ Risk: Position size is the lifeline. Using 1% position with 100x leverage, the actual risk is only equivalent to 1% of a full spot position. Core formula: Real risk = Leverage × Position ratio. Stop-loss ≠ Loss: The account's insurance box.

In the 2024 March 12 crash, 78% of liquidated accounts shared a common characteristic: losses exceeded 5% but still did not set a stop-loss. Professional trader's iron law: Single loss should not exceed 2% of the principal, equivalent to setting a "circuit insurance fuse" for the account.

2. Rolling positions ≠ Scalping: The correct way of compound interest is a step-by-step position building model: First position 10% for trial and error, add 10% of profit to the position. 10,000 principal with a first position of 1,000 (10x leverage), every 10% profit adds 100 to the position. When Bitcoin rises from 75,000 to 82,500, the total position only expands by 10%, but the safety margin increases by 30%.

3. Institutional-level risk control model Dynamic Position Formula: Total position ≤ (Principal × 2%) / (Stop-loss range × Leverage)

Example: 10,000 principal, 2% stop-loss, 10x leverage, calculated position = 10,000 × 0.02 / (0.02 × 10) = 1,000.

Step-wise profit-taking method

① Close 1/3 at 20% profit ② Close another 1/3 at 50% profit ③ Move stop-loss on remaining position (exit when breaking the 5-day line).

Hedging mechanism: Use 1% of principal to buy Bitcoin, practical tests can hedge 80% of high risk.

In the 2024 April Black Swan event, this strategy successfully salvaged 23% of account net value. Fatal traps: Empirical data shows holding a position for 4 hours: liquidation probability increases to 92%. High-frequency trading: Average 500 operations per month consumes 24% of the principal with greed for profit: failing to take profit in time results in an 83% account drawdown.

Mathematical expression of trading essence

Expected profit = (Win rate × Average profit) - (Loss rate × Average loss). When setting a 2% stop-loss and 20% take-profit, only a 34% win rate is needed to achieve positive returns. By strictly stopping losses (average loss 15%) and capturing trends (average profit 15%), achieving an annualized return of over 400%.

Market rules:

Single loss ≤ 2%, Annual trades ≤ 20, Win-loss ratio ≥ 3:1; 70% of the time holding cash and waiting. The essence of the market is a probability game, smart traders use 2% risk to seek trend bonuses. Remember: Control losses, and profits will naturally run. Establish a mechanical trading system to let discipline replace emotional decisions, which is the key to sustained profitability.