Trading discipline is the true dividing line.
Last night, Xiao Li called me again, his voice hoarse like he swallowed sandpaper: 'With a capital of five hundred thousand, only two thousand left after three days. This thing really can’t be touched...'
He was referring to his own experience of trading Ethereum with three times leverage. I couldn't bear to tell him that I went through a similar collapse half a year ago, but now I use eight times leverage, and my account is becoming increasingly stable.
It's not leverage that's toxic, but rather that we overestimate our ability to manage our mindset too easily.
1. Leverage is a magnifying glass, not a magic wand.
Leverage is like a sharp kitchen knife; in the hands of a chef, it can create exquisite dishes, but in the hands of someone who doesn't know how to use it, it will only hurt themselves. Xiao Li's problem is very typical: as soon as he sees market fluctuations, his adrenaline spikes, he goes all in with three times leverage, and when he loses, he can't bear to cut his losses, and when he makes a bit, he wants to make more.
I remember when I first tried leveraged trading, Old Zhou told me a memorable phrase: 'Leverage does not create risk, it merely exposes hidden risks.' If you have problems with your trading, leverage will only expose those problems more quickly.
2. The leverage secrets of trading experts
Old Zhou, whom I met last year, completely changed my view on leverage. In his ten years of trading, he turned a capital of thirty thousand into over twenty million, consistently using five to ten times leverage.
I asked him for the secret, and he directly took out his phone to show me the transaction records:
Before each position, I must draw trend lines; only consider entering the market when the daily EMA30 is stable.
Set a stop-loss immediately when opening a position, and close the position without hesitation if losses exceed 5%.
Lock in half of the profits immediately when profits reach 20%, using the profits to bet on subsequent market trends.
"The leverage I use has never been low, but I never fill my positions," Old Zhou said, "It's like driving; going fast doesn't mean you have to press the accelerator all the way down; the key is knowing when to brake."
He told me that the most important thing in leveraged trading is capital management, which is precisely the aspect that most retail investors neglect. Setting a reasonable leverage limit, combined with stop-loss and hedging strategies, can significantly reduce risks.
3. The three core disciplines of leveraged trading
From Old Zhou and my own practical experience, I have summarized three iron rules:
Accurate judgment — do not touch ambiguous markets.
Previously, I was like Xiao Li, daring to place orders while looking at five-minute candlesticks. Now I only enter the market after confirming the daily trend, giving up those seemingly promising opportunities. In leveraged trading, choosing a low leverage multiple can better control positions and trading risks, which is particularly important for investors with less experience.
Steady execution — build positions in batches, never chase after rising prices.
Even when the market is clear, I enter the market in batches, with the first position not exceeding 20% of total capital. The market always has opportunities; there is no need to bet everything at once.
Strict stop-loss — set a stop-loss line as soon as you open a position.
This is the most counterintuitive step. Setting stop-loss points and strictly enforcing them is a key method for controlling risk in leveraged trading. My current rule is: a 5% loss must be cut, and I will not accept any 'let's wait and see' excuses. Even if I occasionally get stopped out by a 'spike', I do not regret it.
4. Leverage is a tool; mindset is fundamental.
Leverage is essentially a financial tool that allows investors to amplify their investment scale through borrowed funds, thus improving capital efficiency. Its core advantage lies in the ability to control larger positions with relatively small capital. The problem is that most people treat leverage as casino chips, while few see it as a scalpel that requires precise operation.
The root of Xiao Li's losses is not the three times leverage, but his 'gambler's mentality': opening positions without observing trends, always hoping for a 'rebound' after a loss, never setting stop-losses, and becoming emotional whenever the market fluctuates.
The reason Old Zhou can consistently profit with ten times leverage is that he has ingrained 'accurate judgment, steady execution, and strict stop-loss' into his bones. He truly understands that leverage is a double-edged sword, amplifying potential gains while also proportionately amplifying risks.
Conclusion: Control leverage, rather than being controlled by it.
In this market, there are always people who criticize leverage for causing losses, but are unwilling to admit their own problems — seeking quick success, lacking a systematic approach, and failing to maintain their mindset.
Leverage is never the enemy; it is a tool, an amplifier. If you have a system, it amplifies your profits; if you mess around, it amplifies your losses.
The market can come at any time, but until you have cultivated the discipline of Old Zhou, perhaps the best leverage is zero leverage. When you are truly ready, you will find that leverage can become an accelerator of your wealth, rather than a grave for your account.
After all, the kitchen knife itself is not guilty; it depends on whether the person holding the knife understands the system. Follow A Ke to learn more firsthand information and cryptocurrency knowledge, becoming your guide in the crypto world; learning is your greatest wealth!
