Attention all contract liquidations! Here’s some solid information for you!
Why do contracts always liquidate? It's not bad luck; it's that you fundamentally don't understand the essence of trading! This article, encapsulating ten years of trading experience with low-risk principles, will completely overturn your understanding of contract trading — liquidation is never the market's fault but a time bomb you've personally set.
Three major truths that overturn cognition
Leverage ≠ Risk: Position size is the lifeline
Using 1% position with 100x leverage, the actual risk is only equivalent to 1% of full exposure in the spot market for Bitcoin. One student used 20x leverage to trade ETH, investing only 2% of capital each time, with three years and no liquidations. Core formula: Real risk = leverage × position ratio.
Stop loss ≠ Loss: The ultimate insurance for your account
During the 312 crash in 2024, the common feature of 78% of liquidated accounts: losses exceeded 5% without setting stop loss. Professional traders' iron rule: single loss must not exceed 2% of capital, which is equivalent to setting a 'circuit fuse' for the account.
Rolling positions ≠ All in: The correct way to compound interest
Laddered position building model: initial position 10% for trial, increase position by 10% of profits. For an initial capital of 50,000, the first position is 5,000 (10x leverage), adding 500 each time profits increase by 10%. When BTC rises from 75,000 to 82,500, total position only expands by 10%, but safety margin increases by 30%.
Institution-level risk control model
Dynamic position formula
Total position ≤ (capital × 2%) / (stop loss percentage × leverage)
Example: 50,000 capital, 2% stop loss, 10x leverage, maximum position = 50000 × 0.02 / (0.02 × 10) = 5,000
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 if it breaks below the 5-day line)
In the 2024 halving market, this strategy increased an initial capital of 50,000 to over a million during two trends, with a return rate exceeding 1900%
Hedging insurance mechanism
Use 1% of capital to buy Put options while holding positions, which can hedge 80% of extreme risks. During the Black Swan event in April 2024, this strategy successfully salvaged 23% of account net value.
Empirical data on fatal traps
Holding a position for 4 hours: probability of liquidation increases to 92%
High-frequency trading: average of 500 operations per month results in a loss of 24% of capital
Profit greed: failing to take timely profits results in an 83% account drawdown
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 losses (average loss of 1.5%) and trend capture (average profit of 15%).
Ultimate rules:
Single loss ≤ 2%
Annual trades ≤ 20
Profit-loss ratio ≥ 3:1
70% of the time in cash waiting
Remember: control your losses, and your profits will run. Establish a mechanical trading system, allowing discipline to replace emotional decision-making, which is the ultimate answer for sustained profitability.
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