Always facing margin calls in contracts is not just bad luck; it's because you haven't grasped the essence of trading! Many attribute margin calls to 'a bad market' or 'too much leverage' without realizing that the ticking time bomb of margin calls is buried by their own actions.
This article, which condenses ten years of practical experience into a 'low-risk principle,' will completely overturn your understanding of contracts—there's no need to gamble on market trends or stay up all night; by relying on rules and mathematical logic, you can avoid margin calls and achieve stable profits.
First, break through 3 cognitive misconceptions: you've always mistakenly regarded 'risk sources' as 'scapegoats.'
Many people face margin calls, starting from 'misunderstanding core concepts.' Keep these 3 truths in mind, and the probability of a margin call will drop by 80%:
1. Leverage ≠ risk; position is the life-and-death line.
90% of people fear '100 times leverage,' thinking the higher the multiple, the easier it is to face margin calls. But the truth is: real risk = leverage multiple × position ratio, not just looking at the leverage itself.
For example, under 100 times leverage, using only 1% of the position, the actual risk is only equivalent to 1% of a full spot position;
I have a student who used 20 times leverage for ETH, only investing 2% of his principal each time, and after three years without a margin call, he achieved a 3-fold return.
Conversely, even if you only use 5 times leverage, if you operate with a full position, a 20% adverse move could lead to a margin call—don't be intimidated by the leverage factor; controlling the position is key to avoiding margin calls.
2. Stop-loss ≠ loss; it’s the 'insurance fuse' for the account.
During the 'March 12 crash' in 2024, I counted that 78% of accounts that faced margin calls had one commonality—they hadn’t set stop-losses even after losses exceeded 5%, holding on until the principal was wiped out.
The iron rule for professional traders is: single loss must not exceed 2% of the principal. For example, with a principal of 50,000, the maximum single loss is 1,000 yuan; once it reaches the stop-loss line, regardless of whether it might rebound afterward, close the position immediately.
A stop-loss is not 'accepting a loss,' but rather a way to install 'insurance' for the account—even if you're wrong, you only lose a little, preserving capital for the next opportunity; not setting a stop-loss is truly 'betting all the money.'
3. Rolling positions ≠ all-in; it’s the 'correct way to open compound interest.'
Many people make some money and then go 'all in', resulting in losing all their profits with just one pullback. True rolling positions mean 'using profits to increase positions without increasing the risk of the principal.'
Share a 'stair-step position-building model':
Only use 10% of the principal for the first position to test (for example, a principal of 50,000 with an initial position of 5,000 yuan and 10 times leverage);
For every 10% profit, only use 10% of the profit to increase the position (if you earn 500 yuan, then add 50 yuan to the position).
Last year, when BTC rose from 75,000 to 82,500, someone used this model, with total positions only expanding by 10%, but the safety margin increased by 30%—both amplifying returns and keeping risks under control.
Second, institutional-level risk control model: 3 formulas that clarify risks clearly.
Professional institutions do not operate contracts based on 'gut feelings' but rely on mathematical formulas to control risks. These 3 models can be directly used by ordinary people:
1. Dynamic position formula: Calculate 'how much position can be opened at most.'
Can't calculate position? Just use this formula:
Total position ≤ (principal × 2%) ÷ (stop-loss range × leverage multiple)
For example: with a 50,000 principal, if you want to control a single loss at 2% (1,000 yuan), using 10 times leverage and setting a stop-loss range of 2% (stop-loss when the price moves against you by 2%), then:
Maximum position = (50000 × 0.02) ÷ (0.02 × 10) = 5000 yuan
This means you can only open a position of up to 5000 yuan; exceeding even a little could breach the '2% loss' bottom line—calculating positions according to the formula prevents reckless position increases driven by greed.
2. Three-step profit-taking method: Let profits be 'realized safely without wasting the trend.'
Many people either 'run after earning a little' or 'get greedy and lose their profits back.' The 'three-step profit-taking method' can solve this problem:
① When profits reach 20%, close 1/3 (realize part of the profits first to protect the base position);
② When profits reach 50%, close another 1/3 (further lock in profits and reduce risk);
③ For the remaining 1/3 position, use the '5-day moving average trailing stop' (close the position if the price drops below the 5-day line; if it doesn't break, continue holding, so as not to waste the trend).
During the 2024 halving market, someone used this strategy to grow a principal of 50,000 to 1 million in two trends, achieving a return rate of over 1900%—they didn't miss the big market while preventing profit reversal.
3. Hedging insurance mechanism: even extreme market conditions can lead to 'less loss.'
Black swan events (like sudden policies or exchange failures) are disaster zones for margin calls. Using 'options hedging' can protect against 80% of extreme risks:
While holding positions, use 1% of the principal to buy 'Put options' (put options)—if the market crashes, the gains from options can offset the losses from contracts; if the market rises, you only lose at most 1% of the option cost.
During the black swan event in April 2024, people around me who used this strategy preserved an average of 23% of their account net value, with no one facing a margin call—spending a little to buy 'insurance' can save lives at critical moments.
Three, 3 fatal traps: data shows how many people fall due to these details.
Don't think that 'understanding theory means you won't face margin calls.' Many people fall victim to 'habits of details.' Look at a set of real data to remind yourself:
Holding a position for 4 hours: the probability of a margin call skyrockets from 15% to 92%—don't think 'holding on a bit longer will lead to a rebound'; the longer you hold, the more you lose.
High-frequency trading: accounts with an average of 500 trades per month will incur transaction fees that erode 24% of the principal—contracts earn 'trend money,' not 'fees gambling'; the more frequent the operations, the slower the losses.
Profit greed: 83% of accounts that 'failed to take profits in time' will eventually give back all their profits—don't wait for 'more profits'; the profits you realize are the real money.
Four, the mathematical expression of trading essence: it turns out that making profits is so 'simple.'
Many people think 'profits depend on luck,' but the essence of trading is 'a game of probability' that can be calculated using mathematical formulas.
Expected profit = (win rate × average profit) - (loss rate × average loss)
For example: if you set a 2% stop-loss and a 20% profit target, even if the win rate is only 34% (10 trades for 3.4 winning trades), the expected profit is still positive—this means that if you keep this up in the long run, you will definitely earn.
Professional traders are even tougher: controlling average losses at 1.5% and pulling average profits up to 15%, even with a win rate of only 40%, can achieve an annualized return of over 400%—don't chase 'being right on every trade'; as long as 'you earn more than you lose,' it’s a long-term win.
Five, the ultimate principle: remember these 4 rules, and contracts can yield stable profits.
Finally, condensing ten years of trading experience into 4 'ultimate principles': memorize and follow them, and you can avoid margin calls and achieve stable profits:
Single loss ≤ 2%: no matter how optimistic you are about the market, never let a single loss exceed 2% of the principal;
Annual trades ≤ 20: don't operate frequently; capturing 20 certain opportunities in a year is more profitable than trading every day;
Profit-loss ratio ≥ 3:1: when you earn, it should be at least 3 times the amount you lose; for example, if you lose 2%, you should earn at least 6% before taking profits;
70% of the time, keep positions empty and wait: don't always think about 'grabbing every wave of the market'; waiting with an empty position for certain opportunities is more reliable than randomly opening positions.
Contracts are not about 'gambling on size,' but about 'using 2% of risk to seize the trend's dividends.' Control losses, and profits will naturally follow; establish a mechanical trading system where discipline replaces emotions; this is the ultimate answer to sustained profitability.
