How to prevent liquidation when trading contracts?

During periods of extreme market volatility, the best practice is to avoid risk, especially when there may be technical issues at the exchange or significant market fluctuations occur. At this time, it is advisable to participate with a light position, keeping the risk at a minimum. My personal principle is to only trade Bitcoin or major cryptocurrencies with high trading volumes, avoiding low-volume altcoins, as they carry a high risk towards the end of the market.

I set my maximum drawdown at 50% to avoid liquidation. In general, it is about being cautious when the risk is high and being bold when the risk is low, but finding this balance is indeed not easy.

In terms of asset allocation, I only invest 10% of my liquid funds for trading. Once profits reach a certain multiple, I withdraw profits to lock in gains and then continue to trade with a smaller amount. Successful contract traders often start with small amounts; if you do not have a strong financial background, it is best not to compare the size of your capital with others.

Finally, for inexperienced new traders, not participating in contract trading may be the best strategy to avoid liquidation. I spent half a year exploring the contract market and found that even top traders have experienced multiple liquidations before achieving success. Therefore, acting within your means is very important.

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