In the community at three in the morning, yet again, someone is posting screenshots of their liquidation, lamenting about 'manipulative market makers', 'toxic market conditions', and 'just one more point and I would break even', with excuses more abundant than vegetables at a market. As someone who has been navigating this circle for eight years and has witnessed countless ups and downs, I just want to say one harsh truth: what you blew up is never just your position, it's that little self-deceptive luck, that ignorance thinking you could gamble against the market!
How many people use 100 times leverage as a shield, blaming the tool for being too harsh when they lose everything, yet can't even understand the real risks? Let's not beat around the bush today; I'll get straight to the hard facts and explain the underlying logic that can help you survive in the market, breaking it down clearly. At least those who understand can avoid 80% of the liquidation pitfalls.
1. Leverage is a knife that cuts only those who can't calculate clearly.
There are always people who believe in 'hundred-fold leverage betting everything, achieving financial freedom overnight', only to be harvested by the market as soon as they enter. Please understand, leverage itself is not a monster; the inability to distinguish the real relationship between leverage and position is the fatal flaw. Many people think that opening a 100-fold leverage is equivalent to taking on 100-fold risk, which is purely a failure in mathematics.
I teach you how to calculate clearly: Real leverage = Platform leverage × Actual position percentage. If you open 100-fold leverage but only dare to use 10% of your position, the real risk is only 10 times; but if you impulsively use 50% of your position, even with only 20x platform leverage, the real leverage can reach 10 times. Do you see? What determines your life or death is never the leverage multiple given by the platform, but how much principal you dare to gamble.
I've seen too many beginners who dare to go all-in with high leverage with just a few thousand U as their principal, calling it 'rich rewards come from great risks', only to see their capital go to zero with a slight market pullback. Remember my words: Leverage is a magnifier; it can amplify profits but also magnify your foolishness. Before you can calculate the real leverage, don’t touch any leveraged trades.
2. Stop-loss is not a decoration; it is an 'airbag' for the principal.
“I'll hold on a bit longer, I will definitely rebound.” “Just a small loss, it's too regrettable to close the position.” Is this you before the liquidation? Setting a stop-loss is like a formality, it’s a common pitfall for all traders, and it’s also the core method for the market to harvest the inexperienced. Here, I have one iron rule for stop-loss: a single trade loss must not exceed 2% of the principal.
Don’t think 2% is too little to make big money; survival is always more important than becoming rich overnight. For example, if you have 10,000 U in principal, the maximum you can lose in a single trade is 200 U. This means that even if you judge incorrectly 50 times in a row, you would still have half of your principal left and a chance to turn things around; but if you dare to lose 10% each time, 10 mistakes would mean going to zero, without even the qualification to make a comeback.
More importantly, the stop-loss must be set in advance; write down the stop-loss level in your memo before placing the order, and close the position when the time comes without hesitation. I've seen people set stop-losses but withdraw them temporarily due to market fluctuations, resulting in a loss from 2% to liquidation; this kind of operation is purely self-destructive. The stop-loss is like a car's airbag; it’s not used in normal times but can save your life at a critical moment. Those who find it troublesome and don’t use it will eventually face a major accident.
3. Rolling positions should be like rolling a snowball, not rolling off a cliff.
How to increase the position after making a profit reveals a person's trading mindset. Many people get carried away after earning a little; they double the position with a 10% profit, calling it 'chasing victory', only to have the market reverse, not only regurgitating the profits but also losing the principal. This kind of operation is not rolling positions; it’s actively jumping off a cliff.
Real experts roll positions, always 'using profits to gamble, never risking the principal'. My operating habit is: profit 10%-15%, increase the position by 10% of the profit; profit over 30%, then consider a slight increase in the position, always ensuring the principal is safely withdrawn. Simply put, after making money, use the profits given by the market to play; even if you lose, you won’t feel pain, as the principal has already been safely pocketed.
Here, I share a position calculation formula I’ve used for many years, remember it: Total position ≤ (Principal × 2%) / (Stop-loss margin × Real leverage). Mathematics doesn’t lie, but K-lines are all traps; calculating using this formula before each order can help you avoid most risks. There are also rules for taking profits: reduce one-third of the position when profit reaches 20%, reduce another one-third at 50%, and close all positions when breaking key moving averages; forming muscle memory is a thousand times more reliable than your intuition.
Lastly, I give you three numbers; remember them to survive the bull and bear markets.
In this market, those who can make money in the long term do not rely on luck but on iron rules. Finally, I summarize three core numbers for everyone to engrave in their minds: single trade loss ≤ 2%, annual trades ≤ 20, profit-loss ratio ≥ 3:1.
Single trade loss ≤ 2% is the lifeline; annual trades ≤ 20 is to reduce the chances of making mistakes (the more trades, the higher the probability of stepping into pitfalls); profit-loss ratio ≥ 3:1 ensures long-term profitability (earning once can cover three losses). These three numbers may seem simple, but they can filter out 90% of ineffective trades, helping you stay clear-headed in a chaotic market.
I've seen too many people get liquidated, blaming the market, the manipulator, or luck, never willing to review their own operations. But true winners only reflect after losses: Was the position wrong? Or was the stop-loss not executed? The market is never wrong; the mistake lies in your little lucky thoughts and undisciplined operations.
