Total liquidation of contracts? Actually, it's because you don't understand these principles
After eight years of contract trading, I've summed it up: liquidation is not just bad luck, it's about not managing risk properly.
The following simple low-risk methods can change your perspective on contracts.
1. Don't be afraid of high leverage; the key is how much you invest: for example, using 100 times leverage but only risking 1% of your capital to trade, the actual risk is similar to investing 1% of all your money in spot trading.
The core principle is: real risk = leverage multiplier × the proportion of your investment.
2. Stop-loss is not a loss; it's insurance for your account: during the market crash in 2024, 78% of those who faced liquidation lost 5% but stubbornly held on without stopping losses.
Experienced traders have a dead rule: the money lost in a single trade should never exceed 2% of your capital.
3. Calculate the position size before taking action: there's a simple formula: the maximum amount you can invest should not exceed (capital × 2%) divided by (stop-loss percentage × leverage multiplier).
For example, if you have 50,000 in capital, and can accept a loss of 2% with 10 times leverage, then you can only invest a maximum of 5,000.
4. Take profits in three steps; don't be greedy: sell 1/3 when you earn 20%, sell another 1/3 when you earn 50%, and if the remaining drops below the 5-day moving average, sell all.
In 2024, someone used this method to grow their 50,000 capital to 1,000,000.
5. Spend a little money on “insurance”: when you have open positions, spend 1% of your capital to buy a Put option (consider it as buying insurance) to cover 80% of sudden risks.
During that unexpected drop in 2024, this helped preserve 23% of the capital.
Whether trading can be profitable can actually be calculated: (winning frequency × average profit per win) minus (losing frequency × average loss per loss).
If each time the maximum loss is 2% and you take 20% when you earn, even with only a 34% probability of winning, you can still make money.
Finally, remember four iron rules:
The money lost in a single trade should not exceed 2% of your capital;
A maximum of 20 trades per year;
The money earned should be at least 3 times the amount lost;
Do not act 70% of the time, wait for good opportunities.
Don't trade based on emotions; stick to the established rules; this is the key to consistently making money. Follow Sister Bing, and let her guide you through the challenges.
