Why do contracts always lead to liquidation? It's not bad luck; you simply don't understand the essence of trading! This article, condensing ten years of trading experience into low-risk rules, will completely overturn your understanding of contract trading—liquidation is never the market's fault, but a time bomb you set yourself.
Three major truths that overturn understanding
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 full position in spot trading. A certain student operated ETH with 20x leverage, investing only 2% of the principal each time, with three years of zero liquidation. Core formula: Real risk = Leverage multiple × Position ratio.
Stop loss ≠ Loss: The ultimate insurance for the account
In the 2024 March 12 crash, the common feature of 78% of the liquidated accounts was: losses exceeding 5% still did not set stop losses. Professional traders' iron rule: single losses must not exceed 2% of the principal, equivalent to setting a 'circuit fuse' for the account.
Rolling positions ≠ All-in: The correct way to open up compound interest
Step-by-step position building model: First position 10% for trial, increase position with 10% of the profit. With a principal of 50,000, the first position is 5,000 (10x leverage); every 10% profit uses 500 to increase the position. When BTC rises from 75,000 to 82,500, the total position only expands by 10%, but the margin of safety increases by 30%.
Institution-level risk control model
Dynamic position formula
Total position ≤ (Principal × 2%) / (Stop loss margin × Leverage multiple)
Example: With a principal of 50,000, 2% stop loss, and 10x leverage, the maximum position is calculated as 50000 × 0.02 / (0.02 × 10) = 5000.
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 when breaking the 5-day line)
In the 2024 halving market, this strategy increased a principal of 50,000 to a million in two trends, with a yield exceeding 1900%.
Hedging insurance mechanism
Use 1% of the principal to buy Put options during the position; actual testing can hedge 80% of extreme risks. In the black swan event in April 2024, this strategy successfully saved 23% of the account's net value.
Empirical data on fatal traps
Holding a position for 4 hours: The probability of liquidation rises to 92%
High-frequency trading: Average of 500 operations per month leads to a loss of 24% of the principal
Profit greed: Not taking profits in time leads to an 83% profit drawdown in the account
IV. Mathematical expression of the essence of trading
Expected profit = (Win rate × Average profit) - (Loss rate × Average loss)
When setting a 2% stop loss and a 20% take profit, only a 34% win rate is needed to achieve positive returns. Professional traders achieve over 400% annualized returns through strict stop-loss (average loss of 1.5%) and trend capturing (average profit of 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 a 2% risk to seize trend benefits. Remember: Control your losses, and profits will follow. Establish a mechanical trading system, allowing discipline to replace emotional decision-making, which is the ultimate answer for sustained profitability.
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