Three core truths
Real risk = Leverage multiple × Position ratio. With 100x leverage using 1% position, the risk is equivalent to holding 1% in spot trading.
Stop-loss is account insurance; a single loss exceeding 5% without a stop-loss can easily lead to liquidation. Professionals typically limit single losses to no more than 2% of capital.
Stepwise position building is safer. Start with 10% for trial and error, increase position by 10% with profits, balancing returns and risks.
Institution-level risk control model
Dynamic position formula: Total position ≤ (Capital × 2%) / (Stop-loss range × Leverage multiple).
Three-stage profit-taking method: Take profit 20%, 50% each at 1/3, exit remaining position when it breaks the 5-day line.
Using 1% of capital to buy Put options can hedge against 80% of extreme risk.
Deadly trap
Holding a position for 4 hours has a liquidation probability of 92%. High-frequency trading incurs a monthly loss of 24% of capital; failing to take profit in time (83%) will result in a loss.
Nature of trading
Expected profit = (Win rate × Average profit) - (Loss rate × Average loss). With a 2% stop-loss and 20% take profit, a 34% win rate can yield a positive return.
Ultimate rule
Single loss ≤ 2%, annual trades ≤ 20, profit-loss ratio ≥ 3:1, 70% of the time in cash waiting. Control losses, rely on disciplined decision-making to achieve sustained profit.
