#数字资产市场动态 How to Break the Cycle of Liquidation in Contract Trading? I used to repeatedly fall into the trap of liquidation cycles until I developed a comprehensive risk control system, which helped me shift from frequent losses to a relatively stable profit phase.

Many people blame high leverage for liquidation, but leverage itself is not the enemy—position size is. The essence of risk is: leverage × position size. Even with high leverage, if combined with disciplined position sizing, it can be safer than low leverage with heavy positions.

Stop-loss must be strict. Once losses exceed 2% of the account, you must exit the position. This is not about giving up but about insuring the account. Holding a position for 4 hours waiting for a rebound? Data shows the liquidation rate is 92%. Greedy and not taking profits? 83% of profits are eventually lost. High-frequency trading sounds full of opportunities, but the actual principal loss can reach 24%.

Profit-taking also requires rhythm. When profit reaches 20%, close 1/3 of the position to lock in gains; at 50%, close another 1/3; the remaining position should have a stop-loss moved to a key level (like the 5-day moving average), letting profits run freely.

Regarding position sizing, this formula can be used: Total position = (Principal × 2%) / (Stop-loss range × leverage multiple). Use this logic for every entry, not intuition. After making a profit, want to add to the position? Not going all-in, but using 10% profit to compound the position—this allows for compound growth while controlling risk.

In extreme market conditions, always have a backup—use 1% of the principal to buy options for hedging, so even the biggest black swan can’t turn the market against you.

The essence of trading is simple: 2% stop-loss paired with 20% take-profit. As long as the win rate reaches 34%, profitability is achievable. Persisting for a year with a 400%+ annual return is entirely possible. The ultimate rule is straightforward—keep individual losses within 2%, trade no more than 20 times a year, and maintain a profit-to-loss ratio of 3:1 or higher. The remaining 70% of the time, stay out of the market and patiently wait for high-probability opportunities.

This system is not just theory; it has been repeatedly validated in actual trading. Master these principles, and you will find that liquidation can actually be avoided.