Why do contracts always get liquidated? It's not bad luck; it's because you fundamentally misunderstand the essence of trading! This article condenses a decade of trading experience into low-risk rules that will completely overturn your understanding of contract trading—liquidation has never been the market's fault, but rather a time bomb you set yourself.
Three major truths that overturn cognition
Leverage ≠ Risk: Position is the lifeline
Using a 1% position with 100x leverage, the actual risk is only equivalent to 1% of a full spot position. A student operated ETH with 20x leverage, investing only 2% of the principal each time, with three years of no liquidation record. Core formula: Real risk = Leverage × Position ratio.
Stop loss ≠ Loss: The ultimate insurance for the account
In the 2024 March 12 crash, the common feature of 78% of liquidated accounts: losses exceeded 5% without setting a stop loss. The iron rule of professional traders: a single loss should not exceed 2% of the principal, equivalent to setting a "circuit fuse" for the account.
Rolling position ≠ All in: The correct way to open compound interest
Ladder position model: first position 10% trial error, use 10% of profits to increase positions. 5,000 yuan initial position with 10x leverage, increase position by 500 yuan 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 ≤ (Principal × 2%) / (Stop loss range × Leverage)
Example: with a principal of 50,000, 2% stop loss, and 10x leverage, the maximum position is calculated as = 50000 × 0.02 / (0.02 × 10) = 5000 yuan
Three-step take profit method
① Close 1/3 when profit reaches 20% ② Close another 1/3 when profit reaches 50% ③ Move stop loss on remaining position (exit below 5-day line)
In the 2024 halving market, this strategy increased a 50,000 yuan principal to a million during two trends, with a return rate of over 1900%
Hedging insurance mechanism
Use 1% of the principal to purchase Put options while holding, which has been tested to hedge 80% of extreme risks. In the April 2024 black swan event, this strategy successfully saved 23% of account net value.
Empirical evidence of fatal traps
Holding a position for 4 hours: liquidation probability increases to 92%
High-frequency trading: an average of 500 operations per month consuming 24% of the principal
Greed for profit: 83% of accounts that did not take profits in time gave back profits
IV. Mathematical expression of the essence of trading
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 an annualized return of over 400% through strict stop losses (average loss of 1.5%) and trend capturing (average profit of 15%).
Ultimate rule:
Single loss ≤ 2%
Annual trades ≤ 20
Profit and loss ratio ≥ 3:1
70% of the time waiting in cash
The essence of the market is a probability game; smart traders risk 2% to capture trend dividends. Remember: Control losses, and profits will run. Establish a mechanical trading system to let discipline replace emotional decision-making, which is the ultimate answer for sustained profitability.
I am Xiao O, a professional analyst and educator, a mentor and friend on your investment journey! As an analyst, the most basic thing is to help everyone make money. I solve confusion, manage positions, and speak with strength. When you lose direction and don't know what to do, follow Xiao O, and I will guide you.
