The problem that all contract traders encounter
Shorted a coin
Almost liquidated
Should I add margin to raise the liquidation price
Or let it be liquidated?
Simulate a dialogue with Livermore to trace back this issue
You:
A friend shorted MON, and is about to be liquidated, with a capital of 2000U. He asked whether to let it liquidate or to add margin to push the liquidation point back
Livermore:
There is only one iron rule in trading: always know how much you can lose
Letting it liquidate means nailing the loss at 2000U
Adding margin means leaving the upper limit of the loss to be determined by the market
The market will never hold back just because you don't want to lose
You:
He said he is confident that this coin will drop
Livermore:
In the market, confidence is the most expensive emotion
You may be right about the direction, but you will never be right about the timing
It might indeed drop, but it could also rise first to liquidate you before turning back in the direction you predicted
What dies is not the judgment, but the failure to set a cage for the losses
You:
He is torn: not adding margin means a loss of 2000U, but adding might result in a bigger loss
Livermore:
The upper limit of risk is the lifeline of the trader
2000U is a controllable wound
Adding margin is like opening the wound, allowing the market to decide how deep to cut
Most people die in the next second of adding just a little more
You:
He said that if he adds a little margin, the loss is still within his acceptable range, and the liquidation price is more reasonable
He asked if he can add in this situation
Livermore:
Whether you can add depends not on direction but on structure
If you have predetermined "how much I can lose at most"
and adding margin is still within this hard limit
and the new liquidation price aligns better with market structure
Then it’s not called blindly adding positions, it’s called reallocating risk
The premise is: the upper limit cannot be arbitrarily expanded due to emotions
Otherwise, that is gambling
You:
He still emphasizes that he is very certain it will drop
Livermore:
The market never rewards certainty
The market rewards those who are willing to admit I might be wrong and leave room for that
Those who can endure until the market turns are not the smartest, but those who maintain the upper limit
You:
Should I tell him your words verbatim?
Livermore:
Just tell him one thing
The direction is a guess, the position is a calculation
Whether you can survive until the moment of correction
Does not depend on how accurately you see it
But depends on your ability to limit errors
#币安实盘交易