The money used for contracts in this circle should never exceed 20% of the spot funds. This should be an iron rule established by veterans in the cryptocurrency world, and it should have already formed a consensus.
For example, if you have 500,000 in spot on Binance, then the money in your contract account should not exceed 100,000. If you make a profit in contracts, you should transfer it to spot, ensuring that this ratio never exceeds 20%.
This is a very simple method of fund management.
Now, when following trades on exchanges, you must not be tempted to directly follow a trader just because they have been performing well recently.
You absolutely should not exceed 20% of your funds.
In fact, 20% of funds is already quite high for most people.
You must understand that as long as there is leverage, there is a possibility of total loss. Significant drawdowns are commonplace.
Going all in and setting stop losses can be really painful when the stop loss is triggered.
If others have a high entry threshold, that is also a filtering process, requiring people with more capital to follow. For instance, if someone has a threshold of 10,000 USDT, you must have at least 60,000 USDT to follow.
If you do not have that much capital, then do not participate.
This is a very simple method of fund management.
This guy in the picture has 6.5 million USDT in contract leverage, thinking that setting a stop loss would be fine. But what happened? That night it didn’t trigger, and by the time the stop loss was supposed to be executed, he had already been liquidated.
If this were all his savings, it would be so distressing. I can't even imagine it; he would have directly faced a wave of poverty.
