Attention all who have experienced total liquidation on contracts! Here’s some valuable information for you!
Why do you keep experiencing total liquidation on contracts? It’s not bad luck; it’s that you don’t understand the essence of trading! This article, which condenses ten years of trading experience into low-risk rules, will completely change your understanding of contract trading—liquidation is never the market's fault but a time bomb you planted yourself.
Three major truths that overturn your understanding
Leverage ≠ risk: Position size is the lifeline
Using 1% position under 100x leverage means the actual risk is only equivalent to 1% of a full spot position in Bitcoin. One student used 20x leverage on ETH, investing only 2% of the principal each time, maintaining a three-year record without liquidation. Core formula: Real risk = Leverage × Position size.
Stop loss ≠ loss: Ultimate insurance for the account
In the 312 crash in 2024, 78% of liquidated accounts shared a common characteristic: losses exceeding 5% without setting stop losses. The iron rule of professional traders: a single loss must not exceed 2% of the principal, equivalent to setting a 'circuit fuse' for the account.
Rolling position ≠ all-in: The correct way to open compound interest
Laddered position building model: Start with 10% for trial and error, and use 10% of the profit to increase position. For a principal of 50,000, the first position is 5,000 (10x leverage), and 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%.
Institution-level risk control model
Dynamic position formula
Total position ≤ (Principal × 2%) / (Stop loss margin × Leverage)
Example: With a principal of 50,000, 2% stop loss, and 10x leverage, the maximum position is calculated as 50,000 × 0.02 / (0.02 × 10) = 5,000.
Three-stage take profit method
① Close 1/3 at 20% profit ② Close another 1/3 at 50% profit ③ Move stop loss for remaining position (exit if it breaks the 5-day line)
In the 2024 halving market, this strategy increased a principal of 50,000 to over a million in two trends, yielding over 1900%.
Hedging insurance mechanism
Use 1% of the principal to buy Put options while holding positions, which can hedge against 80% of extreme risks based on real tests. In the April 2024 black swan event, this strategy successfully saved 23% of the account's net value.
Empirical data of fatal traps
Holding a position for 4 hours: probability of liquidation increases to 92%
High-frequency trading: average of 500 operations per month results in a loss of 24% of the principal
Profit greed: failure to take profits in time leads to an 83% account drawdown
IV. 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 an annualized return 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
Profit-loss ratio ≥ 3:1
70% of the time in cash waiting
The essence of the market is a probability game; wise traders use 2% risk to capture trend dividends. Remember: control your losses, and profits will run. Establish a mechanical trading system to let discipline replace emotional decision-making, which is the ultimate answer to sustained profits.

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