After so many years of contract trading, watching countless people get liquidated and then blame everything else—cursing market manipulation, blaming the brutal行情, or calling themselves unlucky—honestly, I’ve been there too. I once lost half a year’s salary in a single liquidation, and I was furious at the time. But after the second time, I had a realization: it’s not the market’s fault, nor the leverage’s fault. The real culprit is poor risk control. Today, I want to share the low-risk mindset I’ve developed over the years, which might help you see contract trading in a new light.

**How scary is leverage really? Actually, you’ve misunderstood**

When people hear about 100x leverage, they start trembling, thinking it’s a gambler’s tool. But the truth is—leverage itself isn’t evil. The problem lies in how you use it.

Look at it from another angle: you have 100,000 USDT and trade with 100x leverage. But here’s the key: if you only use 1% of that, which is 1,000 USDT as margin, the outcome is completely different. Even if the market moves against you by 10%, you only lose 1% of your total funds. Notice, it’s not 1,000 USDT times 10% times 100x; it’s the position size of 1% times a 10% move, which results in a 1% loss of your total capital.

This is the crucial formula: **Actual risk = Leverage × Position ratio**.

Conversely, if you use all 100,000 USDT at 100x leverage, a 1% market move will liquidate your position immediately. But as long as you keep your position at 1% of your total funds, even with 100x leverage, the risk feels similar to a 1% price fluctuation in spot trading.

My own approach is: leverage can go up to 50x, but I strictly limit each trade’s position to within 3% of my total funds. This way, even if I make a wrong call, the loss per trade remains manageable.

**Stop-loss isn’t giving up; it’s buying insurance for yourself**

During the big drop in 2024, I analyzed some platform data and found that nearly 80% of liquidations happened like this: the account had already lost more than 5%, but the trader stubbornly held on, only to lose more and more, until finally being wiped out.

Here’s a hard rule: all reliable traders never let a single loss exceed 2% of their principal.

For example, if your capital is 50,000 USDT, 2% is 1,000 USDT. Once that trade loses 1,000 USDT, cut your losses immediately, regardless of how the market rebounds later. Sticking to this discipline, even if you lose 10% in a year, it’s better than getting wiped out in one shot. The data shows that most liquidations happen because traders refuse to cut losses, and in the end, the market teaches them a lesson.

The key is to understand—stop-loss isn’t admitting failure; it’s preserving your capital to fight another day. The difference between professional traders and gamblers often lies in this decisive stop-loss mindset.