Ten years in the crypto world, the most painful was an 800,000 loss—holding positions for 4 hours, the account went from floating profit to liquidation.
1. Three major truths that overturn perceptions: The survival logic understood only after losing 800,000.
- Leverage ≠ Risk: Position size is the line between life and death.
Risk is not in the leverage multiplier, but in position control. Using 1% position with 100x leverage means the risk is only equivalent to 1% full position in spot trading. Some students used 20x leverage to trade ETH, risking 2% of their principal each time, with no liquidation in three years, achieving an annual return three times higher than spot trading. Core formula: Real risk = Leverage multiplier × Position ratio. If I understood this back then, the 800,000 loss would have been at least halved.
- Stop loss ≠ Loss: The ultimate insurance for the account.
In the 312 crash of 2024, 78% of liquidated accounts did not stop loss after losses exceeded 5%. My 800,000 loss was also due to the fantasy of 'it will rebound', dragging a floating loss from 3% to 20% before being forcibly liquidated. Now I set an 'insurance fuse': a single loss should not exceed 2% of the principal, like a circuit that automatically cuts off power when overloaded, helping me avoid the black swan in April 2024 and protect my 3 million principal.
- Rolling positions ≠ All in: The correct way to compound profits.
In the early years, I went all in with profits, leading to rapid gains and losses. Later, I built positions in a laddered manner: starting position 10% for trial and error, only using 10% of profits to add to the position. With a principal of 50,000, the initial position was 5,000 (10x leverage), and for every 10% profit, I added 500. During the wave when BTC rose from 75,000 to 82,500 in 2024, total positions expanded by 10%, safety margin increased by 30%, and profits were even higher than full positions.
2. Institutional-level risk control model: From 'passive liquidation' to 'active control'.
- Dynamic position formula: Calculate clearly before placing orders.
Before opening a position, calculate: Total position ≤ (Principal × 2%) / (Stop loss percentage × Leverage multiplier). For example, with a principal of 50,000, 2% stop loss, and 10x leverage, the maximum position is 50,000 × 0.02 / (0.02 × 10) = 5,000. During the halving market in 2024, I reached a million with this, achieving a return rate over 1900%.
- Three-stage take profit method: Secure profits.
Close 1/3 of the position at 20% profit to secure profits; close another 1/3 at 50% to reduce costs; use trailing stop losses for the remainder—exit if it breaks the 5-day line. Last year, I preserved 80% of my profits in a certain cryptocurrency, while friends who held on lost almost everything.
- Hedging insurance mechanism: Giving positions a 'bulletproof vest'.
When holding positions, use 1% of the principal to buy put options, hedging against 80% extreme risk. In April 2024, during the black swan event, the market dropped by 30%, and I only lost 5%. Black swans in crypto are inevitable; don’t go out without a 'bulletproof vest'.
3. Empirical data on deadly traps: A guide to avoiding pitfalls bought with an 800,000 loss.
- Holding positions for 4 hours increased the liquidation probability from 15% to 92%. Cut positions immediately if losses exceed 2%, as capital is more important than opportunities.
- An average of 500 operations per month resulted in 24% loss of principal due to fees. Current annual operations do not exceed 20, which is more stable.
- Accounts that do not take profits on gains. Once expectations are met, exit in batches to secure profits.
4. Mathematical expression of the essence of trading: Beating the market with probability.
Expected profit formula: (Win rate × Average profit) - (Loss rate × Average loss). With a 2% stop loss and 20% take profit, a win rate of 34% can still lead to long-term profits. I rely on strict stop losses (average loss of 1.5%) and capturing trends (average gain of 15%), achieving an annual return over 400%.
Ultimate rules: Single loss ≤ 2% (life-preserving); annual trades ≤ 20 (fewer mistakes); profit-loss ratio ≥ 3:1 (more earnings); 70% of the time in cash (waiting for opportunities).$BTC $ETH #ETH巨鲸增持 #美联储比特币储备 #币安Alpha上新