Why do contracts always get liquidated?
Why do contracts always get liquidated? It's not bad luck; it's that you don't fundamentally understand the essence of trading! This article, condensing ten years of trading experience into low-risk rules, will completely overturn your understanding of contract trading—liquidation has never been the market's fault, but rather a time bomb you planted yourself.
Three major truths that overturn perceptions
Leverage ≠ Risk: Position is the lifeline
Using 1% position with 100x leverage, actual risk is only equivalent to 1% of full spot margin. A certain student used 20x leverage to trade ETH, investing only 2% of capital each time, with no liquidation records over three years. Core formula: Real risk = Leverage × Position ratio.
Stop-loss ≠ Loss: The ultimate insurance for accounts
During the 2024 March 12 crash, 78% of liquidated accounts shared a common feature: losses exceeding 5% without setting stop-loss. Professional traders' iron rule: single losses must not exceed 2% of capital, equivalent to setting a 'circuit fuse' for the account.
Rolling positions ≠ All-in: The correct way to compound returns
Ladder Building Model: Initial position 10% for trial and error, increase position by 10% of profits. With an initial capital 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 expands by 10%, but the safety margin increases by 30%.
Institution-level risk control model
Dynamic position formula
Total position ≤ (Capital × 2%) / (Stop-loss margin × Leverage)
Example: 50,000 capital, 2% stop-loss, 10x leverage, maximum position = 50000 × 0.02 / (0.02 × 10) = 5000 yuan
Three-tiered profit-taking method
① Take profit 1/3 at 20% profit ② Take another 1/3 at 50% profit ③ Move stop-loss for remaining position (exit below the 5-day line)
In the 2024 halving market, this strategy increased a capital of 50,000 to a million through two trends, with a return rate exceeding 1900%.
Hedging insurance mechanism
When holding positions, use 1% of capital to buy Put options, which can hedge 80% of extreme risks. 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 500 operations per month leading to a loss of 24% of capital
Profit greed: 83% of accounts did not timely take profits and returned profits
IV. 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 annualized returns of 400%+ through strict stop-loss (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, wait with no positions
The essence of the market is a probability game; smart traders use 2% risk to seize trend bonuses. Remember: control your losses, and profits will run on their own. Establish a mechanical trading system, letting discipline replace emotional decision-making, which is the ultimate answer for sustained profits.
