Three Major Truths That Disrupt Cognition

Leverage ≠ Risk: Position Size is the Lifeline

With 100x leverage and a 1% position, the actual risk is only equivalent to 1% of a fully collateralized spot position. A certain student used 20x leverage to trade ETH, only investing 2% of the principal each time, with three years of no liquidation records. Core formula: Real Risk = Leverage × Position Ratio.

In the March 2024 crash, the common feature of 78% of liquidated accounts: a loss exceeding 5% without setting a stop-loss. Professional traders' iron rule: 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 Approach to Compound Interest Laddered Positioning Model: Initial position 10% for trial and error, add position with 10% of profits. With a principal of 50,000, the initial position is 5,000 (10x leverage), and every time there is a 10% profit, add 500 to the position. 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: 50,000 principal, 2% stop-loss, 10x leverage, maximum position = 50000 × 0.02 / (0.02 × 10) = 5000

Three-Stage Take-Profit Method

① Close 1/3 at 20% profit ② Close another 1/3 at 50% profit ③ Move stop-loss on remaining position (exit below the 5-day line)

In the 2024 halving market, this strategy increased the 50,000 principal to a million across two trends, with a return rate exceeding 1900%

Hedging Insurance Mechanism

When holding a position, use 1% of the principal to buy Put options, which has been tested to hedge 80% of extreme risks. In the April 2024 Black Swan event, this strategy successfully salvaged 23% of account net value.

Deadly Trap Data Evidence

Holding a position for 4 hours: liquidation probability rises to 92%

High-Frequency Trading: Average monthly 500 operations consume 24% of principal

Greed in profit: not taking timely profits results in 83% of the account's profits being given back

Four, 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 1.5%) and trend capturing (average profit 15%).

Ultimate Rule:

Single Loss ≤ 2%

Annual Trades ≤ 20

Profit-Loss Ratio ≥ 3:1

70% Time in Cash Waiting

The essence of the market is a probability game; smart traders use a 2% risk to seize trend dividends. Remember: Control your losses, and profits will naturally run. Establish a mechanical trading system to let discipline replace emotional decision-making, which is the key to sustainability.