Discipline is a protective charm, greed is a death knell.
I looked at his account screenshot, and the display of the balance going to zero was particularly glaring. I had no comfort, nor did I blame him, I just replied with one sentence: 'Brother, this is not a matter of luck; it’s just that you’ve reached the point where you’re about to explode.'
After studying with me for three months, his performance in the simulation was nothing short of perfect. But once he went live, everything turned into a gamble, always going in with a full position. I reminded him three times to 'halve the position', he agreed verbally, but still went all in. That night, the market fluctuated 200 points in the opposite direction, and he stubbornly refused to cut losses, ultimately being forcibly liquidated at the lowest point.
Don't blame the market for being heartless; it never targets anyone. It simply cashes in everyone's mistakes into bills, without leniency.
The script for liquidation has long been written.
Looking back at his (and most liquidators') trading trajectory, they almost all follow the same death trilogy:
1. Full leverage - use all your bullets at once.
Overweight positions are the primary reason for liquidation. Driven by greed, many people enter with a 'get rich overnight' mentality using high leverage and heavy positions, with extremely weak risk resistance. A slight market fluctuation may trigger liquidation.
2. Stubbornly holding against the trend - treating pullbacks as reversals.
Whenever the market shows a one-sided trend, a large number of stubborn investors will be liquidated. They stubbornly hold long or short positions, failing to adapt and adjust with the trend. Worse, they double down on their mistakes, fantasizing that prices will turn around, only to run out of 'bullets' before they can turn the tide.
3. Having a gambling mindset - not setting stop-loss or setting but not executing.
Not setting stop-loss is a common mistake that leads to liquidation. Many people, once they open a position, are like sitting in a car without a brake system, hoping that the price will move in the direction they expect. The market is not a casino; luck and chance cannot accompany you forever.
Three iron rules that keep me alive in the market.
When I took him through the review, I emphasized three trading iron rules for him to engrave on the edge of the screen:
First, single trade risk ≤2%, always leave room.
Good money management is the first line of defense against liquidation. I recommend that the risk for each trade does not exceed 1%-2% of the total account funds. This means that even after consecutive losses, there will still be enough capital to seize the next opportunity. As long as the green mountains remain, there is no worry about firewood.
Second, only open positions in line with the medium-term trend, do not guess the top or bottom.
My principle is simple: consider going long only above the 60-day moving average, and consider going short only below it. Do not try to catch falling knives, nor predict the end of a trend too early. The market is always right; only we can be wrong.
Third, clear stop-loss, reasonable risk-reward ratio.
I set fixed stop-loss points and ensure that the risk-reward ratio is at least 1:2. For example, a stop-loss of 50 points and a take-profit of at least 100 points. Execute mechanically when the time comes, without emotions. Those who are good at losing do not perish; smart traders never pursue 'constant victory' but rather pursue 'good losses.'
He said it was too simple and worried about not making big money. I told him: complex strategies mostly contribute to the exchange's fees; simplicity allows you to survive longer.
From liquidation to peaceful sleep: he only took two weeks.
Two weeks later, he placed an order again - this time only using 0.5 lots, set a 40-point stop-loss, and took 120 points profit that day.
Late at night, he sent me a message: 'Teacher, I finally had a good night's sleep for the first time.'
I replied to him: 'It's not that you suddenly got better; it's that you finally made it so the market couldn't find a reason to kill you.'
Remember, this market is full of opportunities and traps. Surviving in the market is not due to the kindness of the big players, but because you made the mistakes that needed to be made in advance.
Want to continue playing in this market? First, unload the word 'greed,' then wear 'discipline.' Controlling yourself is 100 times more important than controlling the market.
True success is not getting rich overnight, but being able to sleep soundly every day while the account steadily grows. Trading should be a part of life, not the entirety of it. After all, the meaning of financial freedom is not having unlimited money, but having unlimited choices.
As a trader who has experienced three rounds of bull and bear markets, the only guarantee I can give you is: by following these simple principles, you may miss some opportunities to get rich, but you will never miss the entire market.
In this uncertain world, living long is the true winner. Follow Xiang Ge to learn more first-hand news and cryptocurrency knowledge at precise points, becoming your navigation in the cryptocurrency world; learning is your greatest wealth!#加密市场反弹 #美联储重启降息步伐 $ETH
