Why do contract trades always lead to liquidation?

Why do contract trades always lead to liquidation? It's not bad luck; it's because you fundamentally don't understand the essence of trading! This article, condensed from ten years of trading experience, presents low-risk principles that will completely overturn your understanding of contract trading—liquidation is never the market's fault; it's a time bomb you planted yourself.

Three major truths that overturn understanding

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 spot trading. A student used 20x leverage to trade ETH, investing only 2% of the principal each time, with three years of zero liquidations. Core formula: Real risk = Leverage multiplier × Position size ratio.

Stop-loss ≠ Loss: The ultimate insurance for the account

During the crash on March 12, 2024, 78% of liquidated accounts shared a common feature: losses exceeding 5% without setting stop-losses. A professional trader's rule: Single loss must not exceed 2% of the principal.

Rolling positions ≠ All-in: The correct way to compound

Laddered position building model: First position 10% for trial, increase position by 10% of profits. With a principal of 50,000, the first position is 5,000 (10x leverage); for every 10% profit, add 500. When BTC rises from 75,000 to 82,500, the total position only increases by 10%, but the safety margin improves by 30%.

Dynamic position formula

Total position ≤ (Principal × 2%) / (Stop-loss margin × Leverage multiplier)

Example: With a principal of 50,000, 2% stop-loss, and 10x leverage, the maximum position calculated is = 50,000 × 0.02 / (0.02 × 10) = 5,000

Three-step take-profit method

① Close 1/3 at 20% profit ② Close another 1/3 at 50% profit ③ Move stop-loss for the remaining position (exit if it breaks the 5-day line)

In the 2024 halving market, this strategy increased 50,000 in capital to one million during two trends, with a yield of over 1900%.

Deadly trap data evidence

Holding a position for 4 hours: Liquidation probability increases to 92%

High-frequency trading: Average of 500 trades per month costs 24% of principal

Four, the mathematical expression of trading essence

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 an annualized return of 400%+ through strict stop-loss (average loss 1.5%) and trend capture (average profit 15%).

Ultimate rule: Single loss ≤ 2%, $BTC 70% of the time, waiting in cash. The essence of the market is a probability game; smart traders take a 2% risk to seize trend dividends. Remember: Control losses, and profits will run. Establish a mechanical trading system, allowing discipline to replace emotional decision-making; this is the ultimate answer for sustained profitability.