1. Three Major Truths That Disrupt Cognition: The Survival Logic Understood After Losing 800,000
- Leverage ≠ Risk: Position Size is the Lifeline
Risk does not lie in the leverage multiple, but in position control. Using 1% position with 100x leverage, the risk is only equivalent to 1% full position in spot trading. Some students operated ETH with 20x leverage, investing 2% of their capital each time, without liquidation for three years, achieving three times the annualized return compared to spot trading. Core formula: Real Risk = Leverage Multiple × Position Ratio. Understanding this back then could have reduced the 800,000 loss by at least half.
- Stop Loss ≠ Loss: The Ultimate Insurance for Accounts
During the crash on March 12, 2024, 78% of liquidated accounts did not stop loss due to losses exceeding 5%. My loss of 800,000 was also due to the illusion of 'it will eventually rebound', dragging from a floating loss of 3% to 20% before being forcibly liquidated. Now I set a 'fuse': single losses do not exceed 2% of capital. Like an overloaded circuit that automatically cuts off power, this strategy helped me avoid the black swan in April 2024 and preserve 3 million in capital.
- Rolling Positions ≠ All-In: The Correct Way to Compound Returns
In the early years, I would go all-in on profits, causing profits to come and go quickly. Later, I used a laddered approach for building positions: the first position 10% for trial and only using 10% of the profits to add to the position. With a capital of 50,000, the first position was 5,000 yuan (10x leverage), and for every 10% profit, I added 500 yuan. During the wave where BTC rose from 75,000 to 82,500 in 2024, total positions expanded by 10%, safety margin increased by 30%, and profits were even higher than a full position.
2. Institutional-Level Risk Control Model: From 'Passive Liquidation' to 'Active Control'
- Dynamic Position Formula: Calculate Clearly Before Placing Orders
Before opening a position, always calculate: Total Position ≤ (Capital × 2%) / (Stop Loss Margin × Leverage Multiple). For example, with 50,000 capital, 2% stop loss, and 10x leverage, the maximum position is 50,000 × 0.02 / (0.02 × 10) = 5,000 yuan. During the halving market in 2024, 50,000 turned into a million, with a yield exceeding 1900%.
- Three-Stage Profit-Taking Method: Secure Profits
Take profit by closing 1/3 at a 20% gain, securing profits; close another 1/3 at 50% to reduce costs; use a trailing stop for the remainder—exit if it breaks the 5-day line. Last year, for a certain cryptocurrency, I preserved 80% of my profits, while friends who held it just ended up with scraps.
- Hedging Insurance Mechanism: Give Positions 'Bulletproof Vests'
When holding positions, use 1% of capital to buy Put options, hedging against 80% extreme risk. In April 2024, when the market dropped by 30%, I only lost 5%. Black swan events in the cryptocurrency circle are inevitable; don’t venture out without a 'bulletproof vest'.
3. Empirical Evidence of Deadly Traps: A Guide to Avoiding Pits Earned from Losing 800,000
- Holding a Position for 4 Hours, the Probability of Liquidation Soared from 15% to 92%. If the loss exceeds 2%, immediately cut the position; capital is more important than opportunity.
- An Average of 500 Transactions Per Month, Fee Losses Amount to 24% of Capital. Current annual transactions do not exceed 20, which is much more stable.
- Accounts That Have Not Taken Profit While in Profit. Once the target is reached, exit in batches to secure profits.
4. Mathematical Expression of the Essence of Trading: Using Probability to Beat the Market
Expected Profit Formula: (Win Rate × Average Profit) - (Loss Rate × Average Loss). With a 2% stop loss and 20% take profit, a win rate of 34% can still make money in the long term. I rely on strict stop losses (average loss of 1.5%) and trend capturing (average gain of 15%), achieving an annualized return of over 400%.
Ultimate Rules: Single Loss ≤ 2% (for survival); Annual Trades ≤ 20 (to minimize mistakes); Win/Loss Ratio ≥ 3:1 (to maximize profits); 70% of the time in cash (waiting for opportunities).

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