For those facing total liquidation in contracts! Let me share some valuable insights!
Why do contracts always liquidate? It's not bad luck; you simply don't understand the essence of trading! This low-risk rule, crystallized from ten years of trading experience, will completely overturn your understanding of contract trading—liquidation has never been the market's fault, but a time bomb you planted yourself.
1. Three Major Truths That Disrupt Perception
Leverage ≠ Risk: Position is the lifeline
With 100x leverage using a 1% position, the actual risk is only equivalent to 1% of the spot full position. A certain student used 20x leverage to trade ETH, investing only 2% of the principal each time, with a three-year record of no liquidation.
Core Formula: Real Risk = Leverage Ratio × Position Ratio
Stop-Loss ≠ Loss: The Ultimate Insurance for Your Account
During the 312 crash in 2024, the common characteristic of 78% of liquidated accounts: losses exceeding 5% with no stop-loss set.
Professional trader's iron rule: No single loss should exceed 2% of the principal, which is equivalent to setting a 'circuit fuse' for the account.
Rolling Positions ≠ Going All In: The Correct Way to Compound Interest
Stepped Position Building Model:
Initial Position 10% for trial and error
Use 10% of profits to increase position
Example: With a principal of 50,000, the initial position is 5,000 (10x leverage), and for every 10% profit, an additional 500 is added to the position. When BTC rises from 75,000 to 82,500, the total position expands only by 10%, but the safety margin increases by 30%.
2. Institutional-Level Risk Control Model
Dynamic Position Formula
Total Position ≤ (Principal × 2%) / (Stop-loss Margin × Leverage Ratio)
Example: 50,000 principal, 2% stop-loss, 10x leverage
Maximum Position = 50000 × 0.02 / (0.02 × 10) = 5000
Three-Step Take-Profit Method
Take profit 1/3 at 20% profit
Take profit 1/3 at 50% profit
Trailing Stop on Remaining Position (Exit when breaking the 5-day line)
In the 2024 halving market, this strategy increased a 50,000 principal to a million in two trends, with a return rate exceeding 1900%.
Hedging Insurance Mechanism
Using 1% of the principal to buy Put options can hedge 80% of extreme risks. During the Black Swan event in April 2024, this strategy successfully saved 23% of the account's net worth.
3. Deadly Trap Data Empirical Evidence
Holding a position for 4 hours: Probability of liquidation rises to 92%
High-Frequency Trading: Monthly average of 500 operations results in a 24% loss of principal.
Greed in Profit: Failure to timely take profits resulted in an 83% drawdown of the account.
4. Mathematical Expression of Trading Essence
Expected Profit = (Win Rate × Average Profit) - (Loss Rate × Average Loss)
With a 2% stop-loss and a 20% take-profit set, a 34% win rate is sufficient to achieve positive returns. Professional traders achieve an annualized return of over 400% through strict stop-losses (average loss of 1.5%) and trend capturing (average profit of 15%).
Ultimate Rule
Single Loss ≤ 2%
Annual Trades ≤ 20
Profit/Loss Ratio ≥ 3:1
70% of time spent waiting with no position
The essence of the market is a probability game. Smart traders use 2% risk to seek trend dividends. Remember: Control your losses, and profits will run. Establish a mechanical trading system to replace emotional decision-making with discipline; this is the ultimate answer to sustainable profitability.
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