Why do some traders perform worse as time goes on, while they can manage even take off with small capital? The reason is simple: as the capital increases, the drawdown also increases. An unreasonable drawdown can lead to a margin call. This is something everyone can replicate in my position strategy; we need to change our decision-making! Let's look at a set of data!

When an account drops from 1 million to 800,000 (20% loss), it seems that only a 25% return is needed to recover. But if it drops to 700,000 (30% loss), the required return immediately jumps to 42.86%. This seemingly linear numerical change actually creates exponential difficulty in practice. Because:

1. The psychological tolerance of investors diminishes geometrically with increasing losses.

2. The available margin decreases, limiting trading strategies.

3. Market fluctuations' impact on the remaining principal is magnified by leverage effect.

When an account drawdown approaches 50%, a terrifying "free fall effect" occurs:

- After the principal is halved, the margin ratio required to maintain the same position will double.

- The forced liquidation mechanism begins to show chain reaction characteristics.

- Investors often fall into the "gambler's fallacy," doubling down in an attempt to recover losses.

Taking contract leverage as an example, an investor with a principal of 1 million uses 3x leverage to go long. When losses reach 33%, the account net value remains 670,000, and the available margin is only 170,000. If they continue to hold the original position, the market only needs to fluctuate 2% in the opposite direction to trigger a forced liquidation—this is what Wall Street commonly refers to as the "Margin Call black hole."

In fact, even when the principal drawdown reaches 20%, 85% eventually leads to a margin call. This is not merely a probability issue but the inevitable result of human weaknesses and mathematical laws acting together. When losses exceed the psychological threshold, traders will unconsciously:

1. Abandon the established trading system.

2. Magnify leverage multiples.

3. Frequently chase high-risk targets.

How to control risk?

1. Control the risk of a single trade to within 2%.

2. Adopt dynamic take-profit and stop-loss strategies.

3. Enforce a "cooling-off period" when drawdown reaches 15%.

4. Always keep 30% of "survival reserves."

Remember: the market never lacks opportunities, but your capital only has one life. Those investors who ultimately stand at the top of the pyramid are often not the ones who attack the most, but the survival experts who understand defense the best.