Position control is not a refuge for cowards, but a survival rule for smart people.
At 2 AM, my phone suddenly rang. Upon answering, I heard the hoarse voice of a fan from Shenzhen: 'Teacher Chen, I've lost all my 5000U...' The voice was choked and nearly unable to speak. After hearing his description, I asked him to send me his trading records—sure enough, he entered with a full position of 4900U without even setting a 0.1% stop loss.
This is not the first time I've received such a plea for help. Many people always think that 'full position = quick profit', but the truth is, operating with a full position is like riding a motorcycle without brakes; a slight wrong turn can lead to a disastrous crash.
01 Full position traps, why do they always leave investors bankrupt?
Data shows that the maximum drawdown of full position betting strategies can reach -54%, with an extremely low win rate.
This fan bet 98% of his principal, and under 3 times leverage, a mere 4% price correction was enough to cause his account to be liquidated.
The common liquidation trap in the cryptocurrency circle is high leverage. For example, with 10 times leverage, a 10% reverse price movement can lead to total loss of margin.
Secondly, full position trading deprives the ability to respond to sudden market changes.
When unexpected market fluctuations occur, full position traders cannot reduce their risk exposure through position reduction or adjustment.
What's even scarier is that after stacking leverage on a full position, the initial margin rate approaches 100%, and a slight price reversal can trigger forced liquidation. For example, in BTC perpetual contracts, under full positions with 10 times leverage, a mere 5.2% reverse price fluctuation will trigger full position liquidation.
02 The art of position management, three strategies to turn the tide
Based on years of observing liquidation cases, I summarized three 'rules to avoid liquidation'; these strategies helped my account not only avoid losses in a volatile market but also achieve an 80% growth.
Use only 8% of the total funds for each trade. For a 5000U account, the maximum position for a single trade is 400U. Even if a stop-loss is triggered, the maximum loss is just 28U, which does not affect the overall health of the funds. This approach ensures a layered capital structure, avoiding a total loss from a single failure.
The annualized return of low-frequency traders (the lowest 20% of users by trading frequency) reached 18.5%, significantly higher than the 11.4% of high-frequency traders
Controlling position and reducing trading frequency are equally important, both can reduce risk.
Set strict stop-loss lines, with a single loss not exceeding 1.2% of total funds. For example, with 400U opening a 3 times position, set a stop-loss line of 1.5% in advance, ensuring the actual loss is controlled within 1.2% of total funds. Data shows that when rigid stop-loss rules are set, the probability of avoiding large losses significantly increases.
Be resolute in maintaining an empty position during uncertain market conditions. Don't recklessly increase positions just because of previous profits; wait for a weekly breakout at key points and volume expansion of more than 2 times before entering the market. Investment in the cryptocurrency circle is not only about seizing opportunities but also about avoiding risks from uncertainties.
03 Real case, from monthly liquidation to 17 times growth in 5 months
A fan who used to be liquidated every month saw his funds grow from 2800U to 48000U in 5 months after applying these three rules. He said: 'I used to think full positions were a gamble, but now I understand that controlling position is the key to long-term profits.'
Successful investors follow similar principles—always stay updated on cryptocurrency price dynamics, conduct thorough research, and set stop-losses.
He has developed a habit of spending 1 hour every Sunday night planning for the next week's trades, strictly executing the plan, which is 10 times more stable than mindlessly watching the market every day. This discipline helps him avoid emotional decisions, which is one of the five major psychological barriers that lead to investor losses.
04 Practical tips to help you avoid liquidation fate
For investors looking to further reduce risk, there are more methods to reference.
Adopt a gradual position model to limit the risk of a single position. Choosing the isolated margin model means that even if liquidation occurs, it only affects a single position and will not impact other funds in the account.
This contrasts sharply with the full position model, where all funds may face risk.
Avoid frequent trading. Frequent operations not only risk missing key upward trends but also continuously erode profit margins due to transaction friction costs.
Set a 'trading discipline red line'—a maximum of 2-3 substantial trades per day; exceeding this limit will result in a forced halt of trading.
Abandon the mentality of luck; admitting failure is also a strategy. Data shows that assets with losses exceeding 50% generally require over 120 days to possibly return to break-even, with a very low success probability.
Sometimes admitting failure and reallocating remaining funds to more promising assets can lead to quicker recovery of losses.
In the cryptocurrency market, surviving is more important than making quick money. The market is never short of opportunities; what is lacking is the patience and discipline to protect the principal and avoid traps.
Even when Bitcoin reached the $60,000 mark, over 100,000 investors were liquidated due to using 50-100 times leverage
In the market crash in December 2025, over 190,000 people were liquidated, with a total liquidation amount reaching $553 million
This data brutally reminds us: leverage and full position trading are the biggest traps in the cryptocurrency circle, while reasonable position management is the only reliable moat.
Follow Xiang Ge to learn more firsthand information and insights into the cryptocurrency circle, precise points, becoming your navigation in the crypto world; learning is your greatest wealth!
