At three in the morning, the liquidation notifications on the screen burned my eyes like a hot iron, and in that moment, I finally touched the true temperature of 'risk'.
The first time I witnessed my account go to zero, I actually smiled coldly. It wasn't that I felt sorry for those tens of thousands of dollars, but I finally understood: the market never kills; it’s the traders who hand the knife to the market. Back then, I naively thought that '5x leverage' was just a numbers game, until I opened a position of 30,000 U with a capital of 10,000 U, and the market moved slightly, not even giving me a chance to breathe.
Eight years ago, I entered the crypto space with dreams of getting rich, and like most people, I thought contract trading was a shortcut. As a result, within three months, I experienced my first liquidation. Later, I learned that 93% of contract traders do not survive beyond three months, and accounts with a single position exceeding 10% have an average survival period of only 17 days.
01 The traps of contracts, most people misunderstand
Many people think contract trading is about betting on high or low, buying up or down, simple and crude. In reality, contract trading is more like a game against oneself. Essentially, contract trading is margin trading; it does not directly buy and sell cryptocurrencies but trades a contract for future transactions at a specific price.
Understanding this is crucial. When you go long, you are agreeing to buy at a certain price in the future; when you go short, you are agreeing to sell at a certain price in the future. You won't actually receive the coins, but rather settle the profit and loss price difference.
Leverage is a double-edged sword. With $500 in principal and five times leverage, you can trade $2500, earning $250 with a 10% profit. But the same leverage can also lead to losing half of the principal with a 10% loss.
I have seen too many people, including myself, who initially became obsessed with the illusion of quick profits brought by high leverage. Leverage amplifies not only gains but also human greed and fear.
02 The truth about liquidation: why 90% of people are destined to lose
Liquidation refers to the act of forcibly closing positions when the trader's margin account balance is insufficient to maintain current positions due to adverse market price movements.
The fundamental reason for liquidation is never the market suddenly turning but the trader's position management issues. When margin maintenance is insufficient, the exchange will forcibly close positions, which is liquidation.
Those who open positions against the trend and operate with full positions are almost destined to be eliminated by the market. There is a saying in the futures market: those with full positions are doomed to die! Even funds cannot completely control the impact of sudden events and policies or news.
I have summarized several keys to avoid liquidation: reasonably control leverage, set stop-loss orders, choose trading varieties with lower volatility, diversify investments, and avoid overtrading. It sounds simple, but very few can actually do it.
03 The secret of trading masters is that 70% of the time is spent waiting
What truly transformed me was meeting an old hand who has experienced two bull and bear markets. He told me, 'Contracts are not a gamble; they are the art of risk management.'
Top players understand that success in trading is not about frequent operations, but about patiently waiting for the best opportunity. They are calm 70% of the time and active 30% of the time. Their profits are the spoils transferred from countless liquidation orders.
I now follow two iron rules: never let a single loss touch 5% of the principal, and only engage within my cognitive range. It's better to miss ten opportunities than to make one foolish trade. This is also why traders who strictly adhere to the 5% stop-loss rule have a survival rate that can increase sixfold.
Reducing leverage is a sign of mature traders. From my own experience, gradually reducing leverage from 50 times to below 5 times has led to more stable growth of funds. The lower the leverage, the more daring you are to take positions; when losing, you can decisively stop losses, and when profiting, you can hold on to profits, creating a positive cycle.
04 Mindset management is more important than technical analysis
In contract trading, technical analysis is fundamental, but mindset management is the key to success or failure. Many investors have 'position syndrome': restless without a position, panicking with one.
I once placed 30 orders in a day, only to realize in the chaos that frequent 'all-weather' operations are fatal. When there is no force breaking another force, do not entertain reverse ideas.
Overcoming greed and fear is a must for traders. When your mind is calm enough, you will achieve something. Do not rejoice in profits or be saddened by losses.
I now firmly believe that you should never short Bitcoin. From MicroStrategy's crazy accumulation to sustained net inflow from U.S. institutions, it's becoming very difficult for Bitcoin to experience a massive crash. In the long run, it is highly likely to rise steadily in a fluctuating manner.
05 A survival guide for newcomers, don't repeat my mistakes
From eight years of painful lessons, I have summarized practical advice suitable for newcomers' survival:
Small funds experimenting: start with pocket money that you won't mind losing
Keep leverage below 2-3 times: plan your funds based on a correct understanding of the big cycle
Trade on 1-hour, 4-hour, or daily charts: avoid getting caught in the noise of short-term trading
Never trade with borrowed funds: do not use money for living essentials or borrowed money for contracts
Regularly withdraw profits after making money: lock in profits and continue to roll with small funds
The market does not care about your face; it only recognizes your discipline. Admitting mistakes and stopping losses is the most important ability of a trader. The vast majority of large losses stem from an unwillingness to stop losses.
Every market fluctuation brings a new batch of liquidation records. Looking at those shocking numbers, I seem to see myself eight years ago. The traders who ultimately survived did not avoid liquidation; they learned to respect the market from it.
Some have achieved exponential growth of funds through balancing positions and amplitudes in trends. But more people have lost themselves in the blind pursuit of wealth.
Contract trading itself is not a gamble; unplanned operations are the real gamble. Gamblers rely on adrenaline, while masters rely on a disciplined system. The former seeks overnight wealth, while the latter cultivates long-term survival.
In this market, living longer is more important than earning quickly. Follow Xiang Ge to learn more first-hand information and precise points in the crypto space, becoming your guide in the crypto world; learning is your greatest wealth!#加密市场反弹 #美联储降息 $ETH
