The Iron Law of Not Blowing Up in the Crypto Market!

This low-risk rule, condensed from 8 years of trading experience, will change your perception of contract trading. A liquidation is never the market's fault, but rather a mine you set off yourself. (Suggested to like + save to avoid losing it in the future)

Three Major Misconceptions in Perception:

1. Leverage ≠ Risk: Position size is the life-and-death line. Using 1% position with 100x leverage, the actual risk is only equivalent to 1% of a full spot position. Core Formula: Real Risk = Leverage Factor × Position Ratio. Stop loss ≠ Loss: The account’s insurance box.

In the 312 crash of 2024, 78% of liquidated accounts shared a common characteristic: losses over 5% without setting a stop loss. Professional traders' iron rule: Single trade loss must not exceed 2% of the principal, equivalent to setting a "circuit insurance fuse" for the account.

2. Rolling Position ≠ Scalping: The correct way of compounding is the step-by-step position building model: Initial position 10% for trial and error, increase position by 10% of profits.

With a principal of 10k, the initial position is 1000 (10x leverage), increase position by 100 for every 10% profit. When Bitcoin rises from 75k to 82.5k, 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 Margin × Leverage Factor)

Example: With a 10k principal, 2% stop loss, and 10x leverage, the position is calculated as 10000 × 0.02 / (0.02 × 10) = 1000.

Step-by-Step 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 when breaking the 5-day line).

Hedging Mechanism: Use 1% of principal to buy Bitcoin, practically able to hedge 80% of high risk.

In the Black Swan event of April 2024, this strategy successfully saved 23% of account net value. Fatal Trap Data Evidence: Holding a position for 4 hours: Liquidation probability increases to 92%. High-frequency trading: Average of 500 operations per month costs 24% of principal. Greed in profit-taking: 83% of accounts retrace profits due to not taking timely profits.

Mathematical Expression of Trading Essence:

Expected Profit = (Win Rate × Average Profit) - (Loss Rate × Average Loss). When setting a 2% stop loss and 20% profit target, a 34% win rate is sufficient to achieve positive returns. By strictly enforcing stop losses (average loss 15%) and capturing trends (average profit 15%), annualized returns can reach 400%+

Market Rules:

Single Loss ≤ 2% Annual Trades ≤ 20 Profit/Loss Ratio ≥ 3:1, 70% of the time waiting in cash. The essence of the market is a probability game, and smart traders use 2% risk to bet on trend bonuses. Remember: Control your losses, and profits will take care of themselves. Establish a mechanical trading system that replaces emotional decision-making with discipline; this is the secret to sustainable profits.