Family, who understands! In the crypto world, what we fear most is not losing money, but 'liquidation'—in an instant, your principal is wiped out, leaving no chance for recovery! In fact, reducing liquidation doesn't require complicated operations; just remember these super simple three steps to minimize risk, proven effective 👇
Step 1: Contract/Leverage? Avoid if possible! If you do, don't 'all in' ⚖️
90% of the source of liquidation comes from 'high leverage + heavy positions'! Ordinary people shouldn't be misled by 'leverage to make quick money'; with 10x leverage, a 10% drop leads to liquidation, and with 20x leverage, a 5% drop leads to liquidation. Just a slight market fluctuation can wipe out your account.
If you really can't resist the urge to play, remember: your position must never exceed 10% of your principal! For example, if you have a principal of 10,000, you can only use 1,000 for contracts; even if you lose it all, that's only a 10% loss, not damaging your foundation—don't stake your entire fortune, winning 10 times and losing once will bring you back to square one!
Step two: set the 'stop-loss line' in advance; when the time comes, cut it without hesitation 🚫
Many people face liquidation not because their direction is wrong, but because they 'stubbornly hold on without setting a stop-loss'! Clearly, a 10% drop has already triggered a risk, yet they keep thinking 'let's wait a bit, it will rebound', resulting in deeper losses. Once the leverage is amplified, they are directly forced into liquidation.
A super simple approach: set your stop-loss line before opening a position; when the time comes, cut it without hesitation! For contracts, set a stop-loss of 5%-8%; for spot trading with leverage, set 10%-15% stop-loss. Use small losses to avoid liquidation—stop-loss is not a loss; it's about preserving your remaining capital. As long as you have your foundation, you'll have the next opportunity!
Step three: do not 'bet on direction', only 'follow the trend'; if you don’t understand, just lie flat 📉
Another major pitfall of liquidation: 'guessing the top and bottom, holding against the trend'! Always feeling 'the price has dropped to the bottom, time to bottom fish!' 'It has risen to the peak, time to short!', only to find that the trend hasn’t reversed at all, holding on leads to greater losses, and in the end, liquidation.
The safest way for ordinary people: do not bet on direction, only follow the trend! In a bull market, only go long and do not easily short; in a bear market, only observe and do not casually bottom fish; during sideways markets, simply lie flat and do not itch to open positions. If you don’t understand the market, don’t trade; it’s better to miss out than to force yourself in to 'make quick money'—the market lacks opportunities, but it lacks you who hasn't faced liquidation!
🎯 The last life-saving reminder:
The core of liquidation is not that the market is too harsh, but that you are 'too greedy + too stubborn'—greedy for quick leverage and stubbornly refusing to set a stop-loss, insisting on betting on the direction. Remember these three steps: trade with a small position (preferably not at all), set a stop-loss when the time comes, only follow the trend and do not bet on the direction, and you can avoid 90% of liquidation traps!
Have you ever faced liquidation in the past because you didn't do these key points? Have you learned them now? Let's talk about your avoidance experiences in the comments below! 👇
