Why Do Contracts Always Liquidate?
It's not bad luck; you simply don't understand the essence of trading! This article, which condenses ten years of trading experience into low-risk principles, will completely overturn your understanding of contract trading.
Three Major Truths to Change Your Perspective
Leverage ≠ Risk: Position Size is the Lifeline
Using 1% position with 100 times leverage, the actual risk is only equivalent to 1% of a fully invested spot position. A certain student operated ETH with 20 times leverage, investing only 2% of the principal each time, with three years and no liquidations. Core formula: Actual Risk = Leverage × Position Ratio.
Stop Loss ≠ Loss: Account Insurance
During the March 12, 2024 crash, the common characteristic of 78% of liquidated accounts: losses exceeded 5% but no stop loss was set. Professional trader's iron rule: a single loss should not exceed 2% of the principal, which serves as a “circuit fuse” for the account.
Rolling Position ≠ All In: The Correct Way to Compound
Laddered Position Building Model: First position 10% for trial and error, use 10% of the profit to increase position size. With a principal of 50,000, the first position is 5,000 (10 times leverage), and every time there is a 10% profit, use 500 to increase 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%.
Dynamic Position Formula
Total Position ≤ (Principal × 2%) / (Stop Loss Margin × Leverage)
Three-Stage Take Profit Method
① Take profit 1/3 at 20% profit ② Take profit another 1/3 at 50% profit ③ Move stop loss for the remaining position (exit if below the 5-day line)
In the 2024 halving market, this strategy increased a 50,000 principal to a million during two trends, with a return rate exceeding 1900%
Deadly Trap Data Evidence
Holding a position for 4 hours: liquidation probability increases to 92%
High-frequency trading: Average 500 operations per month consumes 24% of the principal
Greed for profit: Failing to take timely profits results in an 83% profit drawdown in the account
Fourth, the 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 annualized returns of over 400% through strict stop losses (average loss of 1.5%) and trend capturing (average profit of 15%).
Ultimate Rule:
Single Loss ≤ 2%
Annual Trades ≤ 20
Win/Loss Ratio ≥ 3:1
70% of the time, remain in cash waiting
