Having traded derivatives for eight years, I’ve pretty much figured out the ins and outs. To be honest, a liquidation isn’t about bad luck; it’s about not managing risk properly. Today, I’ll share some low-risk practical methods that will definitely change your view on trading derivatives.

**High leverage isn’t scary; it’s all about how you use it**

Many people get scared when they hear about 100x leverage. Actually, it’s not that intimidating. For example, using 100x leverage but only risking 1% of your account balance for a trade means your actual risk is similar to buying spot and earning just 1%. The simple formula: Actual risk = leverage × your actual position size proportion. Once you understand this, high leverage isn’t so mysterious.

**Stop-loss is like buying insurance for your account**

During the big drop in 2024, I analyzed that 78% of liquidations had one common problem—losing 5% and then stubbornly holding on, refusing to stop-loss. These traders all ended up losing everything. Veteran traders follow a strict rule: never lose more than 2% of your principal on a single trade. Sounds conservative? But that’s the secret to surviving longer.

**Position sizing must be calculated thoroughly before placing orders**

Want to know the maximum you can invest? There’s a very useful formula: Maximum investment = (Principal × 2%) ÷ (Stop-loss ratio × leverage).

For example: You have $50,000, willing to accept a 2% loss, and plan to use 10x leverage. Then, your maximum position is $5,000. It seems small? That’s why some traders can survive longer.

**Have a plan for selling**

Just selling all at once after making a profit? That’s asking for trouble. Step-by-step is the way—take profit at 20%, sell 1/3; at 50%, sell another 1/3; if the price drops below the 5-day moving average, close all positions. Last year, someone did this and turned $50,000 into $1,000,000. Not bragging, just real.

**Use options as an "insurance policy"**

A technique many overlook: when holding a position, buy put options with 1% of your principal as insurance. This can cover about 80% of sudden risks. During the unexpected crash in 2024, this method protected 23% of the principal. Small money, big protection—worth trying.

**Trading can actually be calculated with math**

Can you make money? There’s a formula: (Win rate × average profit per trade) - (Loss rate × average loss per trade). For example, if you risk 2% per trade and take profits at 20%, even with only a 34% win rate, you can still be profitable. The odds are in your favor, as long as you follow the rules.

**Four ironclad rules you must follow**

Finally, four points I’ve learned through hard work:
- Never lose more than 2% of your principal on a single trade
- Limit to 20 trades per year
- Your profits should be at least three times your losses
- Rest 70% of the time, waiting for real good opportunities

Don’t let emotions control your trading. Follow the rules; discipline is more valuable than anything. That’s the ultimate logic for sustainable profits.