Three Major Truths that Disrupt Cognition
Leverage ≠ Risk: Position Size is the Lifeline
With 100x leverage using 1% position, the actual risk is only equivalent to 1% of a full spot position in Bitcoin. A student operated ETH with 20x leverage, investing only 2% of the capital each time, with three years of no liquidation. Core Formula: Real Risk = Leverage Ratio × Position Ratio.
Stop Loss ≠ Loss: The Ultimate Insurance for Accounts
During the 312 Crash in 2024, 78% of liquidated accounts shared a common feature: a loss exceeding 5% without setting stop losses. Professional trader iron rule: Single loss must not exceed 2% of the capital, equivalent to setting an 'electrical circuit fuse' for the account.
Rolling Positions ≠ All In: The Correct Approach to Compound Interest
Staggered Position Building Model: Initial Position 10% for trial and error, increase position by 10% of profits. With a capital of 50,000, the initial position is 5,000 (10x leverage), adding 500 to the position for every 10% profit. When BTC rises from 75,000 to 82,500, the total position only expands by 10%, but the safety margin increases by 30%.
Institutional-Level Risk Control Model
Dynamic Position Formula
Total Position ≤ (Capital × 2%) / (Stop Loss Range × Leverage Ratio)
Example: With 50,000 capital, 2% stop loss, 10x leverage, the maximum position is calculated as = 50000 × 0.02 / (0.02 × 10) = 5000.
Three-Step Take Profit Method
① Take Profit 1/3 at 20% profit ② Take Profit another 1/3 at 50% profit ③ Move Stop Loss for Remaining Position (Exit if below the 5-day line)
In the 2024 Halving Market, this strategy increased 50,000 capital to one million in two trends, achieving over 1900% return.
Hedging Insurance Mechanism
Purchase Put Options with 1% of Capital While Holding Positions, which can effectively hedge 80% of extreme risks. In the April 2024 Black Swan event, this strategy saved 23% of account net value.
Deadly Trap Data Empirical
Holding a Position for 4 Hours: Liquidation Probability Increases to 92%
High-Frequency Trading: Average 500 Trades Per Month with 24% Capital Loss
Profit Greed: 83% of Profits Returned Due to Untimely Take Profit
IV. Mathematical Expression of Trading Essence
Expected Profit = (Win Rate × Average Profit) - (Loss Rate × Average Loss)
When setting a 2% stop loss and a 20% take profit, only a 34% win rate is needed to achieve positive returns. Professional traders achieve over 400% annual returns through strict stop loss (average loss of 1.5%) and trend capture (average profit of 15%).
Ultimate Rule:
Single Loss ≤ 2%
Annual Trades ≤ 20
Profit-Loss Ratio ≥ 3:1
70% of the Time in Cash Waiting
The essence of the market is a probability game; smart traders use 2% risk to seize trend dividends. Remember: Control losses, and profits will naturally run. Establish a mechanical trading system to replace emotional decision-making with discipline, which is the ultimate answer for sustained profitability.

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