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Total liquidation of the contract? Actually, it's just that you don't understand these principles.
After six years of contract trading, I've summarized a principle: liquidation is really not about bad luck, it's about not doing proper risk control.
The following simple low-risk methods can change your perspective on contracts.
1. Don't be afraid of high leverage; the key is how much you invest: for example, using 100x leverage but only putting 1% of your capital into trading, the actual risk is similar to putting 1% of all your money into buying spot.
The core is: real risk = leverage multiplier × the proportion of your invested position.
2. Stop-loss is not a loss; it's insurance for your account: during the major market decline in 2024, 78% of those who liquidated were those who lost 5% but stubbornly held on without stopping losses.
Veteran traders adhere to a strict principle: the money lost in a single trade must not exceed 2% of your capital.
3. Calculate your position before taking action: there's a simple formula: the maximum amount you can invest is (capital × 2%) divided by (stop-loss ratio × leverage multiplier).
For example, if you have 50,000 in capital, and can accept a loss of 2%, using 10x leverage, you can only invest a maximum of 5,000.
4. Take profits in three steps; don't be greedy: sell 1/3 when you make 20%, sell another 1/3 when you make 50%, and if the remaining drops below the 5-day moving average, sell everything.
In 2024, someone used this method to turn 50,000 into 1 million.
5. Spend a little money on “insurance”: when you have a position, use 1% of your capital to buy a Put option (consider it as buying insurance), which can cover 80% of unexpected risks.
During the unexpected major drop in 2024, this method helped preserve 23% of the capital.
Whether trading can be profitable can actually be calculated: (winning ratio × average profit per trade) minus (losing ratio × average loss per trade).
If you can only lose a maximum of 2% each time and take 20% when you win, even with just a 34% probability of winning, you can still make a profit.
Finally, remember four iron rules: the money lost in a single trade must not exceed 2% of the capital; trade a maximum of 20 times a year; the money earned must be at least 3 times the losses; refrain from trading 70% of the time and wait for good opportunities.
Don’t rely on your mood to trade; follow the established rules, as this is the key to consistently making money.
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