At 2 AM, the phone vibrated, breaking the silence. On the other end of the video, a fan from Xiamen, Fujian, had red, swollen eyes: 'Brother Le, I've lost all my 6000U... Full position with 5x leverage, and it only retraced 3 points, how did it blow up?'
I had him send me the records—sure enough, 5800U full position bet, without even setting a stop-loss line.
How many people take 'full position' as a shortcut to wealth, unaware that it is a direct path to zero? The truth is: the key to liquidation is not the leverage multiplier, but the position size.
Full Position Trading: Temptations and Traps
In cryptocurrency trading, a full position refers to the act of using all available funds for trading. This means the trader invests all account balances into a single trade, rather than just a portion of it.
Full-position trading may seem simple and straightforward, but it hides huge risks. When Bitcoin recently plummeted by more than 8% in a single day, 1.64 million investors worldwide faced liquidation, with a total amount reaching 19.216 billion dollars. Among them, about 87% of the liquidated investors used full-position margin models.
The greatest danger of full-position trading is that it deprives you of your risk buffer. When you put all your funds into the market, it means that when the next sudden market movement occurs, you have neither funds for hedging nor the ability to seize new investment opportunities.
The mathematical truth of liquidation: weight rather than multiples
The experience of my fan from Xiamen perfectly illustrates this point: he staked 96.7% of his principal, and under 5 times leverage, he couldn't withstand even a slight market correction.
Comparing two sets of data:
800U account, using 750U to open 5 times leverage, a reverse fluctuation of 6% directly leads to zero;
In the same account, using only 75U to open 5 times leverage, a fluctuation of 86.7% is needed to lose everything—risk tolerance differs by nearly 12 times.
Leverage can amplify returns, but it also magnifies risks. In high-leverage trading, even small market fluctuations can lead to forced liquidation of positions. This is why even using lower leverage with an overweight position can also result in liquidation.
The psychological trap of full-position trading
Neuroscience research confirms that the activity of the prefrontal cortex decreases by 17% in a full-position state, the response threshold of the amygdala is lowered, and the proportion of emotion-driven decision-making significantly increases.
In full-position trading, investors are more likely to make irrational decisions. When the market experiences adverse fluctuations, those fully invested often make wrong judgments due to excessive psychological pressure. When a long upper shadow appears on the K-line, fully invested traders tend to interpret it as 'the main force is offloading' and immediately liquidate instead of waiting for confirmation signals.
The 'disposition effect' is also amplified in full-position trading: investors often sell profitable positions too early while holding onto losing positions for too long. This psychological bias stems from humans' natural aversion to loss and their reluctance to admit failure.
The invincibility principle: the wisdom of survival
This year, I have summarized three 'invincibility principles for full-position trading' through blood and tears. Not only did I protect my principal, but my account also grew by 80% against the trend:
1. Only use 7% of total funds for each trade
6000U account, single opening not exceeding 420U. Even if a 7% stop-loss is triggered, you only lose 29.4U, which is a minor injury.
Properly controlling position size is key. Investors should determine the proportion of funds to invest based on their own risk tolerance and trading experience. Generally speaking, novice investors should not have too high an initial position.
2. Single loss should not exceed 1.1% of total funds
420U opened at 5 times leverage, with a stop-loss line set at 1% in advance, actual loss 8.4U ≈ total funds 1.1%. Decisively cut losses to avoid a disaster.
Setting stop-losses is an indispensable risk management measure. A stop-loss is a predetermined maximum loss limit set before a trade, and when the market price reaches this point, it automatically liquidates to limit losses.
3. Be resolute in staying out of the market during unclear trends
Do not open positions out of impatience; wait for the daily line to break through key levels with supporting volume. By giving up 90% of the fluctuations, you can capture 10% of the trend.
In a bear market, it is necessary to appropriately reduce the proportion of positions, especially for investors with heavy or full positions, to seize brief rebound opportunities during the market downturn and appropriately liquidate some lightly trapped stocks.
Transformation from a liquidated trader to a stable trader
There was a fan who faced liquidation month after month; after practicing these three principles, he jumped from 3200U to 55000U in four months. He said, 'I used to think full-position trading was a gamble, but now I understand that true full-position trading is about surviving longer.'
BOSS Wallet's trading data shows that low-frequency traders (the lowest 20% of users by trading frequency) achieved an annualized return of 18.5%, significantly higher than the 11.4% return level of high-frequency traders.
The core of this transformation lies in shifting the mindset from 'chasing high profits' to 'controlling risks'. When your focus shifts from 'how much can I make this time' to 'how much can I potentially lose this time', you have already surpassed most traders.
Conclusion: The market does not need daredevils
The market is never short of daredevils, but lacks wise survivors. The volatility of cryptocurrencies is both a temptation and a trap. For those investors who suffered heavy losses in the crash, this crisis may be the best risk education lesson.
The investment market is never short of opportunities; what it lacks is a sense of reverence for risk and a long-term stable investment philosophy. On the road to wealth freedom, slow is fast, and stability is the key to winning.
The essence of full-position trading is not about who is smarter, but about who is more disciplined. In the emotionally volatile market of digital assets, a systematic trading discipline may be the best moat for investors.
Have you also experienced painful lessons in full-position trading? Have you found a position management method that suits you? Feel free to share your experiences and thoughts.
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