6-Year Trader Summary: Core Rules for Avoiding Liquidation in Contracts
Three Major Insights Disrupted
1. Leverage ≠ Risk: Actual Risk = Leverage × Position Size. 100x Leverage + 1% Position Size ≈ 1% Risk in Spot Trading.
2. Stop-Loss is Insurance: Single Trade Loss ≤ 2%, 78% of Liquidated Traders during the 312 Crash had losses exceeding 5% without a stop-loss.
3. Rolling Positions ≠ All-In: Initial Position 10% for Trial, Increase Position Gradually After Profit (Example: 50,000 Capital, 10x Leverage, 10% Profit adds 500).
Institutional-Level Risk Control Formula
- Dynamic Position: Total Position ≤ (Capital × 2%) / (Stop-Loss Margin × Leverage)
- Three-Stage Take Profit: 20% Close 1/3, 50% Close Another 1/3, Remaining Position Move Stop-Loss (Exit if Breaks 5-Day Moving Average).
- Hedging Strategy: Buy Put Options with 1% Capital, can Hedge 80% of Extreme Risks.
Deadly Traps
- Holding Positions for 4 Hours → 92% Probability of Liquidation
- High-Frequency Trading → Average Monthly Loss of 24% of Capital
- Greed in Taking Profit → 83% of Account Profits Given Back
Essence of Trading
Profit Expectation = (Win Rate × Average Profit) - (Loss Rate × Average Loss).
Discipline > Prediction: Single Loss ≤ 2%, Annual Trades ≤ 20, Profit/Loss Ratio ≥ 3:1, 70% of Time in Cash.
Conclusion: Use 2% Risk to Bet on Trends, Mechanically Execute System, Profits Will Naturally Increase.
