How to establish your own risk control system?

1. When it comes to risk control systems, the most important thing is your own position management. BTC allows a maximum of 10x leverage, while ETH can only be 5-7x leverage. Therefore, to prevent liquidation, the first step is to reduce leverage.

2. Find a trading system that suits you and continuously refine it. Every trade must have a logic; avoid trading randomly.

3. Reduce your trading frequency. Not to mention whether you work for an exchange or not, frequent trading can lead to a mindset of constantly seeking opportunities. When losses and drawdowns occur, this mindset becomes even stronger, leading to revenge trading, and ultimately heavy positions that cause significant losses or liquidation.

4. Never play with clone contracts. Here are a few reasons: First, even if you are lucky and make money on clone tokens, you will lose it back—that's only a matter of time. Second, clone tokens require very high maintenance margin rates. To explain, the relationship between maintenance margin and liquidation risk: for example, $BTC has a maintenance margin ratio of 0.5%. Clone tokens will have a margin requirement 10 to 20 times higher. Therefore, trading clone tokens makes liquidation more likely because the exchange's risk control system doesn't want you to get liquidated. They increase the margin requirement for these tokens because clone tokens have poor liquidity and insufficient depth. Even with low leverage, it’s useless. Using 10x leverage to go all-in on clone tokens, you might think you can withstand 7.5% volatility, but if the maintenance margin is 10% and the initial margin is 12.5%, a 2.5% price movement will force a liquidation of your 10x leveraged position. Plus, with expensive funding fees, liquidation is only a matter of time. We don’t have unlimited bullets, so remember the advice: never play with clone tokens. Don’t envy others making money on clone tokens!

Finally, I wish everyone early financial freedom. Follow me for more useful knowledge. #Gate储备金报告 #Gate广场创作者新春激励