After ten years in the crypto world, the most painful loss is 800,000 - holding positions for 4 hours, the account went from profit to liquidation.
1. Three major truths that overturn cognition: Survival logic learned only after losing 800,000.
- Leverage ≠ Risk: Position size is the lifeline.
Risk is not in the leverage multiplier, but in position control. Using 100x leverage with 1% position has a risk equivalent to holding 1% in spot trading. A student used 20x leverage on ETH, investing 2% of capital each time, with no liquidation for three years and an annualized return three times higher than spot trading. Core formula: Real risk = leverage multiplier × position ratio. Understanding this at the time could have reduced the 800,000 loss by at least half.
- Stop-loss ≠ Loss: The ultimate insurance for the account.
During the 312 crash in 2024, 78% of liquidated accounts did not stop-loss because their losses exceeded 5%. My 800,000 loss was also due to the fantasy of 'it will always bounce back', dragging a floating loss of 3% to 20% before being force liquidated. Now I set up a 'fuse': a single loss not exceeding 2% of capital, like an automatic power cut in case of circuit overload; this helped me avoid the black swan in April 2024 and preserve 3 million capital.
- Rolling positions ≠ All in: The correct way to open compound interest.
In the early years, profits were quickly added to positions. Later, I built positions in steps: the first position was 10% for trial error, only adding 10% of profit to increase the position. With 50,000 capital, the first position was 5,000 yuan (10x leverage), adding 500 yuan for every 10% profit. During the rise from 75,000 to 82,500 for BTC in 2024, total position expanded by 10%, safety margin increased by 30%, and profits were even more than full position.
2. Institutional-level risk control model: From 'passive liquidation' to 'active control'.
- Dynamic position formula: Calculate clearly before placing an order.
Before opening a position, calculate: Total position ≤ (Capital × 2%) / (Stop-loss margin × Leverage multiplier). For example, with 50,000 capital, 2% stop-loss, and 10x leverage, the maximum position is 50,000×0.02/(0.02×10)=5,000 yuan. During the halving market in 2024, I achieved a million using this, with a return rate exceeding 1900%.
- Three-stage profit-taking method: Secure profits.
Take profit of 1/3 at 20%, secure profits; take another 1/3 at 50%, reduce costs; use a trailing stop-loss on the remaining - exit when breaking the 5-day line. Last year, in a certain cryptocurrency, I preserved 80% of my profits, while friends who held on only had scraps left.
- Hedging insurance mechanism: Give positions 'bulletproof vests'.
When holding positions, use 1% of capital to buy Put options to hedge against 80% extreme risk. During the black swan in April 2024, the market fell by 30%, and I only lost 5%. A black swan in the crypto world is inevitable; don't go out without a 'bulletproof vest'.
3. Empirical data of deadly traps: A guide to avoid pitfalls bought with an 800,000 loss.
- Holding positions for 4 hours, the probability of liquidation soared from 15% to 92%. Immediately cut positions when losses exceed 2%; capital is more important than opportunity.
- An average of 500 operations per month resulted in a 24% loss of capital due to fees. Annual operations should not exceed 20 trades for stability.
- Accounts that have not taken profits. When reaching expectations, exit in batches to secure profits.
4. Mathematical expression of the essence of trading: Defeating the market with probability.
Expected profit formula: (Win rate × Average profit) - (Loss rate × Average loss). Set 2% stop-loss, 20% take profit, and a 34% win rate can still make money in the long run. I rely on strict stop-loss (average loss of 1.5%) and capturing trends (average gain of 15%), achieving an annualized return exceeding 400%.
Ultimate rule: Single loss ≤ 2% (life-saving); Annual trades ≤ 20 (fewer mistakes); Profit-loss ratio ≥ 3:1 (more earnings); 70% of the time in cash (waiting for opportunities).
Continuously monitor MEME ATM IOTX.