Crying with pear blossoms and rain

At 3 AM, my phone kept buzzing with messages. A video from a fan in Jiangxi was filled with sobs: $ETH $币安人生

"Sister Duo'er, my 6000U account is gone! I opened a long position with 5 times leverage on the full margin, and it pulled back by 3 points, how could I lose everything so quickly!"

I asked her to send a screenshot of the transaction, and I found the problem at a glance — she invested the entire 5800U without even setting a stop-loss line.

Many people misunderstand full-margin trading, thinking "putting all the money in will earn more," but the reality is quite the opposite:

Full-margin trading is like a car without brakes; once a mistake is made, the speed of liquidation is much faster than with partial positions.

The key to full liquidation is not that the leverage is high, but that the position is too heavy.

Take an 800U account as an example:

If 750U is fully invested with 5 times leverage, a 6% adverse price movement will directly lead to liquidation;

But if only 75U is used with 5 times leverage, it would need to move 86.7% against to wipe out the investment, making the risk tolerance nearly 12 times worse.

This female fan risked 96.7% of her principal; under 5 times leverage, she couldn't withstand such a small pullback.

This year, I've stepped into many pitfalls and summarized 3 principles for "avoiding full liquidation"!

Not only did I not lose principal, but my account also increased by nearly 80%:

First, only use 7% of the total capital for each trade. For example, with a 6000U account, invest a maximum of 420U at one time. Even if hitting a 7% stop-loss line, the loss would only be 29.4U, which has very little impact on the principal;

Second, a single loss should never exceed 1.1%. For instance, if opening 420U with 5 times leverage, set a 1% stop-loss in advance, a loss of 8.4U is exactly 1.1% of the total capital, allowing for timely stop-loss without deep entrenchment;

Third, hold cash during unclear market conditions, and do not increase positions even when in profit. Wait for trends to be clear, such as a daily line breaking resistance with volume following, then enter the market, avoiding erratic operations induced by short-term fluctuations.

Previously, there was a fan who used to get liquidated every month. After following these three principles, in four months, he grew his account from 3200U to 55000U.

He said: "I used to think full-margin trading was a gamble; now I understand that true full-margin trading is about moving steadily forward."

I used to wander aimlessly in the dark alone, but now the light is in my hands.

The light is always on. Will you follow? @加密朵儿puppies

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