Are you constantly getting liquidated in your futures contracts? Master these tips, and a comeback is no longer a dream!
Following futures contracts, are you constantly overwhelmed by liquidations? Don't blame it on bad luck; it's simply because you haven't fully grasped the essence of trading! Today, I'll share some low-risk trading strategies to help you challenge your perceptions and avoid liquidations.
First, let's discuss a few truths that will challenge your perceptions. Many people believe leverage represents risk, but position size is the key. For example, with 100x leverage and only a 1% position size, the actual risk is only 1% of a full spot position size. Some traders have used 20x leverage on ETH, investing only 2% of their principal each time, and haven't experienced a liquidation in three years. Remember this formula: Actual Risk = Leverage × Position Size.
A stop-loss isn't a loss; it's an insurance policy for your account. During the March 12, 2024, crash, many accounts that experienced liquidations had losses exceeding 5% and hadn't set stop-losses. Professional traders adhere to the ironclad rule of limiting losses to no more than 2% of their principal on a single trade, like installing a "circuit fuse" in their accounts.
Rolling a position doesn't mean going all-in. The step-by-step position building model is very practical. Start with 10% trial and error, then add 10% of the profit. For example, with a 50,000 yuan capital, start with 5,000 yuan (10x leverage), and add 500 yuan for every 10% profit. This way, your margin of safety will continue to increase.
Let me also share with you an institutional-level risk control model. The dynamic position formula can help you calculate your maximum position size and avoid overinvestment. The three-tiered profit-taking method is also very effective: close positions in batches at 20% and 50% profits, and use trailing stop-loss orders on the remaining positions. There's also a hedging insurance mechanism. Using 1% of your capital to buy put options can hedge most extreme risks.
At the same time, be aware of some fatal pitfalls. Holding a position for four hours significantly increases the probability of a margin call, high-frequency trading can lead to capital loss, and failing to take profits promptly can easily lead to lost profits.
Trading is essentially a game of probability, and the expected value of profit has a specific mathematical expression. When setting a 2% stop-loss and a 20% take-profit, a 34% win rate is all it takes to achieve positive returns.
Finally, remember the ultimate rule: limit your single loss to no more than 2%, limit your annual trades to no more than 20, maintain a profit-loss ratio of at least 3:1, and spend 70% of your time in a short position. Establish a mechanical trading system, replace emotional decision-making with discipline, manage your losses, and profits will naturally follow. I believe that mastering these principles will ensure your success in futures trading!
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