Avoid Liquidation Risk in Bitcoin Trading: Core Principles

In cryptocurrency trading, especially with $BTC, one of the biggest risks is the complete liquidation of the account. Many investors often think that the market is unpredictable or that they are unlucky, but in reality, liquidation is not the fault of the market but rather a result of poor risk management.

1. Leverage Doesn't Kill You, Position Size Is the Cause The most common mistake is blaming high leverage usage. In reality, the actual risk depends on the position size ratio to the capital:

For example: using 100x leverage but only occupying 1% of the capital means the risk is equivalent to a full spot trade. Meanwhile, many people use 20x leverage with only 2% of the capital and still avoid liquidation for many years. Principle: Do not be greedy with position size. Keeping a small position and managing risk is the way to protect your account. 2. Stop-loss is a protective fuse, not a sign of failure. Most liquidation cases arise from holding a position when losses exceed 5%. This habit leads to significant losses. Professional rule: Each loss should not exceed 2% of the capital. Holding a losing position is not bravery but a risk that pushes the account into the danger of liquidation. 3. Profit Loop, Do Not Bet All Capital A sustainable strategy in trading is to leverage profits to expand positions, rather than betting all initial capital. For example: starting with 10% capital from 50,000 U, each time earning 10%, use 10% of that profit to increase the position. The more it is repeated, the more stable the position becomes and creates a larger safety margin, helping sustainable long-term trading. 4. Effective Risk Control Formula A simple yet effective method to determine the maximum position:

Example: Capital 50,000 U, stop-loss 2%, leverage 10x → Maximum position = 5,000 U 5. Three Steps to Smart Profit Taking When the profit reaches 20%, close 1/3 of the position. When the profit reaches 50%, close another 1/3. Keep the remaining part to continue optimizing profit efficiency and reducing market risk. Conclusion Liquidation is not a necessity, but rather a result of poor risk management. Controlling position size, courageously placing stop-loss orders, and using profits to increase positions are fundamental yet extremely effective principles to protect capital and achieve sustainable growth in Bitcoin trading.