Watching Xiao Li slump in his chair, his face pale, repeatedly muttering: "500U principal, one single trade with a full position of 4800U... I got liquidated directly." At that moment, I seemed to see myself many years ago.

Last week, he came to me complaining. Just starting out in contract trading, with 500U in his account, he opened a position that suddenly jumped to 4800U. A slight fluctuation in Bitcoin's price, and the liquidation notice came. "Thought I could withstand the volatility with full position, but I didn't expect to die even faster," he muttered to himself.

I can understand that kind of despair. I still remember my painful "tuition" from early years—full leverage 10x short position, market moved just 5% against me, and overnight 20,000U vanished into thin air. That lesson taught me three rules for survival. Over the years, following these principles, I’ve never blown up my account again in the contract market.

**Core of Position Management: Never put all your funds into one trade**

The first rule I call the "Single Position No More Than 20% of Account" principle.

Simple and straightforward—if your account has 1000U, each trade should be no more than 200U. Even with 50x leverage, there’s always enough buffer. Xiao Li’s one-time investment of 4800U? Equivalent to putting all eggs in one basket. If the basket drops, everything is gone.

Leverage is a double-edged sword. At 100x leverage, a 1% drop in price liquidates you; at 5x leverage, it takes a 20% drop to trigger liquidation. The difference between these is your life and death line.

When choosing leverage now, I first look at the market condition. If volatility is high, I reduce leverage to below 5x and cut down on position size. Although this lowers potential gains per trade, it keeps me alive. If I’m dead, no matter how high the profit, it’s useless.

**Second rule: Stop-loss always comes first**

Trading without a stop-loss is essentially gambling. My approach is very strict—I set a stop-loss before entering each trade. When losses reach 2% of the account funds, I automatically exit, never manually adjusting.

It sounds conservative, but it’s this conservatism that allows me to survive long enough in the market. Those who stubbornly hold on often die because they cling to the hope that "maybe it will rebound if I wait a bit longer."

**Third rule: Enter and exit in batches**

When I like a certain coin, I never buy all at once. Usually, I split into three or four entries, investing about 25% of the expected position each time. This helps average the entry price and greatly reduces overall risk.

The same applies to exiting. When profits appear, I take profits in stages. This locks in gains and leaves room for further upside.

The contract market is always there, opportunities are always present. But your principal—only one. Protect it, and you’ll have the qualification to talk about gains.