Exchanges
How exchanges do not lose money?
Leveraged trading
The top CEXes allow their customers to trade with a leverage.
This implies actual (and completely automated) borrowng of an asset, with an iterest being charged (automatically deduced from one’s trading account).
For a retail customers everything is a smooth, almost unnotisable experinece - one suddenly has as much leverage as one wishes for seemingly “free”.
Futures
Most of modern CEXes allow retail to trade futures contracts. Futures trading implies leverage (borrowing), although one may trade at a face value of what one have been deposited.
Where do exchanges got assets to lend to the customers? From so-called market-makers, “crypto funds”, their own “tradign desks”, subsidiaries, etc.
Obviously, none of them lose any money, unless the whole scheme collapses, just like FTX did.
The how
Exchanges practice the mantra “winning is not losing”, so they never lose money.
An algorithm will liquidate you (close your position) if there is a mere risk of losing the borrowed assets, involing in an leveraged open position.
The algorithm basically calculates projections of current market velosity and triggers a liquidation event when the projection touches your open position.
This means they have guaranteed stop-loses (long before the actual zero sum).
Actually, they liquidate your position not at a potential 0 or a break-even, but in such a way that their commision will not be “lost” due to your “errornous” position.
Automatic trailing stop-loses, such that there will never be a negative, or even 0 ballance is how to do it. There is literally no other way.
Bots
This is how you should execute your trades - at least maintain trailing stop loses for all your positions, using some bot or a script.
All serious traders (who do it for a living) automated everything, except, perhaps, setting the targets.