Why do contracts always lead to liquidation? It's not bad luck; it's that you fundamentally do not understand the essence of trading! This article condenses ten years of trading experience into low-risk principles that will completely subvert your understanding of contract trading — liquidation is never the market's fault; it's a time bomb you planted yourself.
Three major truths that subvert perception
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. A certain student used 20x leverage to trade ETH, investing only 2% of the principal each time, with three years of no liquidation. Core formula: real risk = leverage multiple × position proportion.
Stop loss ≠ loss: The ultimate insurance for the account
During the 2024 March 12 crash, a common characteristic of 78% of liquidated accounts: a loss of over 5% without setting a stop loss. Professional traders' iron rule: single loss must not exceed 2% of principal, which is equivalent to setting an 'electrical fuse' for the account.
Rolling positions ≠ all-in: The correct way to open compound interest
Laddered position building model: First position 10% for trial, increase position by 10% of profits. For a principal of 50,000, the first position is 5,000 (10x leverage), add 500 for every 10% profit. 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 ≤ (principal × 2%) / (stop loss margin × leverage multiple)
Example: For 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 return rate exceeding 1900%.
Hedging insurance mechanism
When holding positions, use 1% of principal to buy Put options, which can hedge 80% of extreme risks in practice. During the black swan event in April 2024, this strategy successfully saved 23% of the account's net value.
Deadly trap empirical data
Holding a position for 4 hours: liquidation probability increases to 92%
High-frequency trading: 500 trades per month with a loss of 24% of principal
Profit greed: 83% of account profits given up without timely profit-taking
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, a win rate of only 34% 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 rule:
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 game of probability. Smart traders risk 2% to capture trend dividends. Remember: control your losses, and profits will run. Establish a mechanical trading system to replace emotional decision-making with discipline, which is the ultimate answer for sustained profitability.

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