A popular saying in the contract market: a trader who doesn't cut losses is just a machine for the market maker to automatically give away money.

Looking at the data, it’s truly eye-opening. 90% of contract traders end up with zero, but this isn’t because the market is too unpredictable or due to bad luck, but because of one word—stop loss.

I’ve seen too many people whose accounts grow from 100,000 to 1 million, only to be wiped out in one big trade, crashing from the peak straight to the bottom. I’ve also seen those who stubbornly refuse to cut losses, turning unrealized gains into devastating liquidations—brutal lessons learned the hard way.

I myself have fallen into this trap. In March 2023, Bitcoin surged from 28,000 to 35,000. I used 5x leverage to short, and in the end, my account was all red. In January 2024, SOL broke through 120. Greedy, I chased the long, and a single long wick wiped me out to zero. These two lessons were paid for with real money.

Only later did I realize that holding a position might keep you alive once or twice, but gambling-style operations—holding ten times—will inevitably lead to death once. All stories of liquidation start the same way: “Just a little longer, just a bit more,” and then you never see tomorrow.

The real lifesaver is never the win rate, but always the stop loss.

My current stop loss strategy has three layers:

**First Layer: Beginner’s Life-Saving Rule**

Set your stop loss immediately when opening a position. The stop loss range is calculated by a formula— the inverse of leverage. For 20x leverage, it’s a 5% stop loss; for 50x leverage, it’s 2%. Using 10,000 USDT as a position, the maximum loss is 500 USDT. Stick to the stop loss—don’t hope for a turnaround. Staying alive is the hard truth.

**Second Layer: Dynamic Stop Loss**

Lock in profits as they grow. When floating profit hits 5%, move the stop loss to the breakeven point; at 10%, lock in at least 5% profit; at 20%, be even more aggressive, leaving at least 15% in the account. This way, if the market pulls back, profits won’t all be lost.

**Third Layer: Emotional Stop Loss**

After three consecutive losses, close the app and step away from the screen to cool down. When profits start to inflate your ego, withdraw half immediately—don’t wait until you feel good about yourself and get liquidated. Overtrading without rationality is a recipe for disaster.

In May 2024, I used 20x leverage to long Ethereum, setting the initial stop loss at 3520, controlling overall risk at just over 2%. When the price rose to 3700, I moved the stop loss up to lock in some profit. Later, it surged to 4100. The maximum risk was only about 2%, but I kept all the profits. That’s how contract trading should be done.

Stop loss isn’t about giving up; it’s a tactical retreat. Truly skilled traders aren’t those who never get liquidated, but those who get liquidated less, exit quickly, and can stay at the table. The crypto world is never short of opportunities; what’s missing is the ability to survive until the next opportunity arrives with your capital intact.

I used to grope in the dark alone, but now I finally have a light. The light must stay on to see the way clearly.