The core difference between professional traders and gamblers lies in risk management. Even if you have top-notch signals and perfect charts, ignoring risk rules could wipe out your account overnight.
Today, let's break down a set of 'anti-liquidation mindset', so that you can protect your principal no matter how volatile the market is. 🚀
1. First, understand the risk-reward ratio (RRR)
This is the 'life-and-death line' of trading—how much you are willing to lose in proportion to how much you want to earn.
For example, a 1:2 RRR means risking $200 to earn $400; with a 1:5 RRR, risking $200 could yield $1,000.
The higher the ratio, the lower the requirement for the win rate. Even with a 50% win rate, a 1:5 RRR can still ensure profit; this is the confidence of professional players.
2. Set a 'stop-loss red line' for each trade
The risk per trade is fixed at 1%-2% of the principal, this is a hard rule.
For example, with a $10,000 account, the maximum loss per trade is $200. Even if you lose 5 times in a row, you would only be down $1,000, leaving you with $9,000 to recover.
Gamblers always think 'this time I will recover it all', while professional players understand: surviving is more important than how much you win in one go.
3. Stop-loss is your 'life-saving talisman'
A trade without a stop-loss is like running naked.
Stop-losses should not be set arbitrarily; they should be placed at points that can 'overturn your trading logic'. For example, if you are bullish on a breakout, set your stop-loss below the breakout level; if it breaks, admit defeat and exit.
The worst mistake is thinking 'just wait a bit, it might come back'—the moment you move your stop-loss further away, you transition from trader to gambler.
4. Let profits outpace risks
Just look at a set of data to understand:
With a 1:5 RRR, risking 2% each time means winning once earns you 10%. This means one win can offset five losses.
Professional players never care about 'how high the win rate is', they only care about 'earning more when they win and losing less when they lose'.
5. The core of compound interest: small losses, big gains
If strictly enforced:
Five consecutive losses would only reduce the account by 10%; however, one profit at 1:5 can recover all losses and even yield a profit.
No matter how much the market fluctuates, as long as you maintain the rhythm of 'small losses and big gains', your account will grow like a snowball.
Remember: you don't need to catch every wave of the market, and you don't need to win every trade. With discipline, setting stop-losses, and maintaining RRR, liquidation will never find you. Long-term winners in the crypto world rely on skill, not luck.
I am an old hand in the crypto world, follow @加密玖 , providing both fish and fishing lessons—helping you double your small investment in a bull market and become the sharpest knife in the market!
