In the cryptocurrency contract market, liquidation data is like a pulsating blood-red note - according to Coinglass data, the total liquidation amount across the network exceeded $20 billion in 2023. But why do countless people rush in? While most focus on leverage, they have long deviated from the core rules of this game.
One, the myth of leverage: what you calculate is not risk, but the platform's safety cushion.
Beginners often fall into the cognitive trap of '5x leverage = controllable risk'. But in fact, the 'leverage ratio' marked by the platform is essentially the ratio of risk reserves, which has nothing to do with the user's actual risk.
Real Risk Formula: Risk = (Opening Amount × Volatility) / Capital
For example, with a capital of $100,000 and 10x leverage to long BTC, if the price drops by 10%, the actual loss reaches 100% of the capital ($100,000 × 10 × 10%).Volatility crushes leverage: Bitcoin's daily volatility often exceeds 15%, even with 5x leverage, the risk of liquidation in a single day far exceeds that of traditional financial markets.
Truth: Leverage is not a risk controller, but a 'magnifying glass' that amplifies volatility. The true risk anchor point is the percentage of capital you are willing to risk for a single trade - it is recommended that a single position not exceed 20% of the capital, and total positions should be controlled within 2-4 times the capital (in total long and short), with stop loss set strictly within the 10%-20% range of capital.
Two, the essence of contracts: a counter-intuitive 'risk trading'.
Unlike the 'dream investment' of holding coins, the core of contracts is trading risk:
The bloody logic of profit sources: every penny you earn comes from the liquidation losses of others. When 80% of the market goes long, a sharp drop will turn their capital into your profit - this is not a zero-sum game, but a 'negative-sum game' (platform fees exacerbate losses).
First Law of Survival:
Holders can 'play dead' and wait for recovery, but contract players must respond to risks in seconds. A 5% reverse volatility can wipe out those fully invested.
Real experts are like 'risk hunters': they maintain a no position while most chase highs and lows, only striking when risk premiums are highest (like in extreme markets), filtering out ineffective volatility with strict stop losses.
Three, from 'dreamer' to 'risk controller': the threefold transformation of survival in contracts.
1. Cognitive Disruption: Abandon the illusion of 'getting rich through leverage'.
Case: During the 2022 LUNA crash, countless people used 10x leverage to buy the dip, thinking 'after a 90% drop, a 50% rebound would double their investment', but overlooked the fact that another 10% drop would lead to liquidation - ultimately, 99% of dip buyers fell before dawn.
Essence: Contracts are not a tool for 'small bets on big outcomes', but a battlefield where professional risk control harvests non-professional players.
2. Strategy Reconstruction: Establish a 'no position - probe - sniper' model.
No position means risk control: spend 80% of the time in no position waiting, only entering when the market shows a clear trend (like breaking a key support level).
Tentative Position Building: The first position should not exceed 10% of capital, using a small position to validate logic, and if the direction is correct, gradually increase the position (pyramid building method).
Sniper Timing: Choose periods of soaring volatility (like before and after Fed interest rate decisions), using market panic to set precise stop losses.
3. Discipline Execution: Operate like a pilot.
Stop Loss Rule: Every trade must have a preset stop loss (e.g., 5%-8% of capital), and if reached, close the position, never resist the loss.
Strategy Iteration: Regularly review historical trades and eliminate strategies with a win rate below 50%. For example, in 2023, most teams adopted the 'short altcoins + long BTC hedge' strategy to reduce the risk of a single cryptocurrency through diversification.
Four, why do 'simple strategies' still fail to make money?
Even knowing the logic of 'shorting altcoins + going long on BTC', 80% of traders still lose, the root cause lies in:
Human nature's weakness: greed to add positions when profitable (wanting to capture the last point), and hope to hold when losing (expecting a rebound to break even).
Detail Blind Spots:
Why is shorting more conservative than going long? Because altcoins can suddenly surge (as a rescue by the operator), while going long on BTC has market capitalization support.
How to dynamically adjust the stop loss range? In a bull market, it can be relaxed to 15%, while in a bear market, it needs to be tightened to 8%.
Brutal reality: The contract market is a 'cash machine for professionals and a slaughterhouse for amateurs.' Without undergoing hundreds or thousands of simulation trainings (like practicing position management with a demo account), entering solely based on 'watching K-lines' is akin to flying a plane with your eyes closed.
Conclusion: Are you here to 'bet on luck' or 'be professional'?
If contracts are seen as a shortcut to 'get rich overnight', liquidation will be the inevitable outcome; but if viewed as a 'professional risk management', it can become a tool for cognitive monetization.
Remember: in the cryptocurrency circle, 'U (stablecoin) is the survival bottom line, and coins are risk assets.' In a major bear market, holding U can keep you alive to pick up bargains, while holding too many coins may lead to total loss.
Final question: when you open a position, are you 'betting on direction' or calculating 'whether the maximum loss of this trade is within your tolerance'?
The end of contracts is never a competition of leverage but 'who can survive longer on the edge of the risk cliff.'
Still the same saying, bulls have their strategies, bears have their plays, Ding Ge is all about steady wins, steady and solid, to eat meat, click on the main business, hurry up and get on board!
Continue to pay attention to BTC, ETH, BNB.
