Liquidation is not due to market conditions, but because you lack position management.
I have an old friend who has been in the market for seven years, and his record is tragic—he made hundreds of thousands in a bull market, but when a downturn hit, he lost everything in just a few days, including his principal.
I asked him, "How did you end up losing?"
He said, "The direction wasn't wrong; I just over-leveraged in one go, couldn't stop the loss, and it was all gone."
This is not just his problem; it is a common issue for 90% of traders: they can't control their position size.
1. The end of heavy positions is liquidation.
Market volatility is the norm, but the drastic ups and downs in your account are often not due to market conditions but because you started with too heavy a position, leaving no room for mistakes.
Many people think that making quick money requires heavy betting, but when the direction is wrong, it goes to zero instantly. Remember this: it's not that your skills aren't sufficient; it's that you simply don't have the right to use such a large position.
2. The three-stage position method, which I have always used.
Over the years, I have only done one thing: establish discipline to protect my principal.
My "three-stage position method" has saved me countless times:
First stage: Light position trial (within 30%)
Initially confirm the direction, invest a portion of funds; if the direction is wrong, I can withdraw safely;
Second stage: Add on pullbacks (an additional 30%-40%)
Only add positions when the structure is stable; no greed, no impulse, only trend-following trades;
Third stage: Reduce positions on floating profits, take profits when exiting.
Immediately lock in profits when the trend completes, securing the gains, and not letting pullbacks destroy profits.
You can always control risk, but you cannot control the market.
Rather than fantasizing about hitting it big in one go, it's better to grow gradually.
3. Those who lose money cannot manage their positions.
My friend later said something that I remember to this day:
"I have never lost to the market, but I have always lost to my own heavy positions."
This is the reality:
When prices rise, greed kicks in; when floating losses occur, they hold on; when emotions come, discipline is discarded.
Real veterans always operate according to plan:
Single loss ≤ 2% of the account
Lock in profits when exceeding 50% of the principal
If two consecutive trades go wrong, immediately exit and rest.
Without these disciplines, your account will eventually take a dive from high positions.
It's not that you aren't fast enough; it's that you're stumbling around in the dark alone. I've always been here, and the light is right in front of you. If you don't keep up, you'll forever be trapped in the cycle of night.
