Why do contracts always liquidate? It's not bad luck; you simply don't understand the essence of trading! This low-risk principle will completely overturn your understanding of contract trading—liquidation is never the market's fault, but rather a time bomb you planted yourself.
Three major truths that overturn cognition
Leverage ≠ Risk: Position is the lifeline
Using 1% position with 100x leverage, the actual risk is only equivalent to 1% of a full spot position. A certain student used 20x leverage to trade ETH, investing only 2% of the principal each time, with three years without liquidation. 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 over 5% still without a stop-loss. Professional trader's iron rule: Single loss must not exceed 2% of the principal, equivalent to setting a "circuit fuse" for the account.
Rolling positions ≠ All-in: The correct way to open compound interest
Ladder position building model: First position 10% to test, add 10% of profits to the position. With a principal of 50,000, the first position is 5,000 (10x leverage), add 500 for every 10% profit. When BTC rises from 75,000 to 82,500, the total position only increases by 10%, but the safety margin increases by 30%.
Institution-level risk control model
Dynamic position formula
Total position ≤ (Principal × 2%) / (Stop-loss margin × Leverage)
Example: 50,000 principal, 2% stop-loss, 10x leverage, maximum position = 50000 × 0.02 / (0.02 × 10) = 5000
Three-level take-profit method
① Close 1/3 at 20% profit ② Close another 1/3 at 50% profit ③ Move stop-loss for remaining position (exit if it breaks the 5-day line)
In the 2024 halving market, this strategy increased a principal of 50,000 to one million over two trends, yielding over 1900%.
Hedging insurance mechanism
Using 1% principal to buy Put options while holding a position, it was tested to hedge 80% of extreme risks. In the April 2024 black swan event, this strategy successfully saved 23% of the account's net value.
Empirical data on fatal traps
Holding a position for 4 hours: Liquidation probability increases to 92%
High-frequency trading: 500 trades per month consume 24% of the principal
Profit greed: Failure to take profit in time resulted in an 83% profit drawdown of the account
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 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-loss (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 in cash waiting
The essence of the market is a probability game, and smart traders use 2% risk to capture trend dividends. Remember: Control losses, and profits will naturally run. Establish a mechanical trading system, allowing discipline to replace emotional decision-making, which is the ultimate answer for sustainable profitability. $BTC