Recently, the market has been extremely volatile. Just for fun, let me explain: why do contracts always get liquidated?

Check out the overall contract liquidations! Here’s some practical knowledge! $BTC
Why do contracts always get liquidated? It’s not bad luck; it’s because you simply don’t understand the essence of trading!
This article, condensed from ten years of trading experience, reveals low-risk rules that will completely overturn your understanding of contract trading — liquidation is never the market’s fault, but a time bomb you personally set.

Three truths that overturn common beliefs
Leverage ≠ Risk: Position size is the real life-or-death line $ETH
With 100x leverage using a 1% position, the actual risk is only equivalent #比特币 to holding a full position in spot trading.
A student used 20x leverage to trade ETH, investing only 2% of their capital each time, with zero liquidations over three years.
Core formula: Actual risk = leverage multiple × position size ratio.

Stop-loss ≠ Loss: The ultimate insurance for your account $RAVE
During the 2024 March 12 crash, 78% of accounts that got liquidated shared a common trait: they didn’t set a stop-loss even after losing more than 5%.
Professional traders’ iron rule: single trade loss must not exceed 2% of the principal, effectively setting a "circuit breaker" for the account.

Rolling over ≠ All-in: The correct way to compound profits $SOL
Stepwise position building model: start with 10% for trial, add 10% of profits each time.
With a 50k yuan capital, initial position is 5,000 yuan (10x leverage).
Each 10% profit adds 500 yuan to the position.
When BTC rises from 75,000 to 82,500, the total position only increases by 10%, but the safety margin improves by 30%.

Institution-level risk control model
Dynamic position formula:
Total position ≤ (Principal × 2%) / (Stop-loss range × Leverage)
Example: 50k yuan principal, 2% stop-loss, 10x leverage, maximum position = 50k × 0.02 / (0.02 × 10) = 5,000 yuan (

Three-stage take-profit method
① Close 1/3 at 20% profit
② Close another 1/3 at 50% profit
③ Move the stop-loss on the remaining position (exit if it breaks the 5-day moving average)
In the 2024 halving market, this strategy turned 50,000 yuan into millions over two trend cycles, with a return exceeding 1900%.
Hedging insurance mechanism:
Use 1% of the principal to buy put options during positions; real-world tests show it can hedge 80% of extreme risks.
During the black swan event in April 2024, this strategy successfully saved 23% of account net worth.

Fatal trap data evidence
Holding positions for 4 hours: liquidation probability rises to 92%
High-frequency trading: 500 trades per month, losing 24% of principal
Greed for profits: accounts that don’t take profits in time lose 83% of their gains

IV. Mathematical expression of the essence of trading
Expected profit = (win rate × average profit) - (loss rate × average loss)
With a 2% stop-loss and 20% take-profit setting, only a 34% win rate is needed for positive returns.
Professional traders achieve annual returns of over 400% by strictly enforcing an average loss of 1.5% and capturing trends (average profit 15%).

Ultimate rules:
Single loss ≤ 2%
Annual trades ≤ 20
Profit-to-loss ratio ≥ 3:1
70% of the time in cash waiting
The market is fundamentally a probability game; smart traders use 2% risk to seize trend opportunities.
Remember: controlling losses allows profits to run.
Build mechanical trading systems, replacing emotional decisions with discipline — that’s the ultimate path to sustained profitability.