Contract Explosion Avoidance Practical Guide: Survival Rules Learned After Three Liquidations

The worst thing about contracts is not losing money but having earned it only to lose it all due to liquidation.

In my early years, I faced three liquidations that left me in debt. Now, after five years without liquidation, I steadily compound my returns. The key is to adhere to three lines: position, leverage, and stop-loss—avoid these pitfalls, and you will outperform 80% of traders.

Position is your lifeline; don’t put all your eggs in one basket.

I divide my principal into 5 parts, using only 1 part for each trade.

For example, with a principal of 200,000, I only move 40,000 each time, setting a stop-loss at 10% (4,000), which means the risk per trade is only 2% of the total capital.

Even if I make 5 consecutive wrong trades, the total loss would only be 10%, leaving enough capital for a comeback.

Remember: increase your position after making a profit, but do not average down on losses; this is the key to avoiding pitfalls for retail investors.

Using leverage incorrectly is a trap that speeds up your downfall.

For short-term trades, use small positions with high leverage: keep your position at 5%-10% of your capital, with BTC/ETH at 50x leverage and other coins at 30x, opting for isolated margin mode to mitigate risk;

For medium to long-term trades, allocate larger positions with low leverage: maintain a position of 30%-50%, using 10-20x leverage, as the full margin mode is more stable against volatility. I have long used 3-5x leverage; ordinary traders cannot withstand the volatility risk that exceeds 10x.

Moving stop-losses act as a 'bulletproof vest' for profits. Don’t set fixed stop-losses and ignore them; if the market rises, adjust your stop-loss upwards.

For instance, if you open a position at 10,000 with a stop-loss set at 9,000, when it rises to 11,000, move your stop-loss up to 10,500. Even if it retraces, you can still preserve part of your profits.

Don’t be greedy at take-profit; for short-term trades, take 30% profits at 20%-30%, and for long-term trades, sell in batches at 50%-80%. Transfer your profits to a cold wallet promptly; the numbers in your account are not real money.

The core of contract profitability is not guessing the direction correctly but managing risk.

When the funding rate is high, avoid long-term positions, proactively stop-loss before the liquidation line, and steer clear of 100x leverage.

Remember: the market is not short of opportunities to make money; what it lacks is the patience to survive.

By adhering to these three iron rules, you can stand firm amidst the volatility.

In the past, I stumbled alone in the dark; now, I hold the light in my hand.

The light keeps shining; will you follow? @不贪的阿 K

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