Why do contracts always get liquidated? It's not bad luck, but because you fundamentally 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 - liquidation is never the market's fault, but a ticking time bomb you planted yourself.
Three truths that overturn perceptions
Leverage ≠ risk: Position size is the lifeline
Using 1% position with 100x leverage, the actual risk is only equivalent to 1% of a full position in #Bitcoin. A student used 20x leverage on ETH, investing only 2% of principal each time, with three years of no liquidation. Core formula: Real risk = Leverage ratio × Position ratio.
Stop-loss ≠ loss: The ultimate insurance for your account
In the 312 crash of 2024, 78% of liquidated accounts shared a common feature: losses exceeding 5% without setting stop-loss. Professional trader's iron rule: Single loss should not exceed 2% of principal, equivalent to setting an 'electrical fuse' for the account.
Rolling positions ≠ all-in: The correct way to compound interest
Ladder position model: First position 10% for trial, increase position by 10% of profits. For 50,000 principal, 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 ratio)
Example: 50,000 principal, 2% stop-loss, 10x leverage, calculate maximum position = 50000×0.02/(0.02×10)=5000
Three-step profit-taking method
① Close 1/3 at 20% profit ② Close another 1/3 at 50% profit ③ Move stop-loss on remaining position (exit if below 5-day line)
In the 2024 halving market, this strategy turned 50,000 principal into a million across two trends, with a return rate exceeding 1900%
Hedging insurance mechanism
Use 1% of principal to buy Put options during holding; real tests show it can hedge against 80% of extreme risks. In the April 2024 black swan event, this strategy successfully salvaged 23% of account equity.
Data evidence of deadly traps
Holding a position for 4 hours: Probability of liquidation rises to 92%
High-frequency trading: 500 trades per month with a 24% loss of principal
Profit greed: 83% of the account's profits were given back due to not taking profits in time
4. 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 annual returns of over 400%+ through strict stop-loss (average loss 1.5%) and trend capture (average profit 15%).
Ultimate principle:
Single loss ≤ 2%
Annual trades ≤ 20
Win-loss ratio ≥ 3:1
70% of the time waiting with no positions
The essence of the market is a probability game, smart traders use 2% risk to capture trend dividends. Remember: control your losses, and profits will run on their own. Establish a mechanical trading system, allowing discipline to replace emotional decision-making, which is the ultimate answer for sustained profitability. Don't rush in trading; if you're anxious, things will definitely go wrong. If the direction is wrong, admit it, don't hold on. If you're wrong, accept it, stand firm when hit, befriend time, and take it slow!
Trends come first, layouts follow!!!
Feel free to follow me, comment 168 !! $BTC
