Many newcomers to the cryptocurrency world are often trapped by one thought: 'My capital is too small, how can I turn things around?' Thus, leverage becomes their 'lifeline,' fantasizing about heavy bets and a turnaround overnight. But the truth is, heavy positions and high leverage are not shortcuts, but the shortest path to zero; this is not a probability issue, it's a matter of time.
I have seen too many people fall into this trap: they only focus on the 'magic' of leverage amplifying returns, forgetting that it also exponentially amplifies risks. For example, if you invest 10,000 with 10x leverage, a 10% increase can indeed earn you 10,000, but what happens with a 10% drop? You would face a liquidation, and your capital would be wiped out. How much does cryptocurrency fluctuate? It's not uncommon for Bitcoin to fluctuate 20% in a day; your margin simply can't withstand a 'spike' like that.
What's even scarier is that heavy positions can distort your mindset. When you go all-in, every price fluctuation becomes a mental torment; a drop leads to panic selling, a rise leads to greedy chasing, and ultimately all operations become distorted. This is why beginners always buy at the peak and sell at the bottom. Some even find themselves in a leveraged long position during a crash; even though they've set a stop-loss, due to insufficient market liquidity, the price directly breaches their position, and they don’t even have time to trigger the stop-loss order.
Leverage is not a tool, it's a magnifying glass.
Many people misunderstand the essence of leverage. It's like a magnifying glass: it amplifies your judgments and also amplifies your weaknesses. For instance, in extreme market conditions, high-leverage positions are 'liquidation fuel'. The last Bitcoin flash crash caused 180,000 liquidations within 48 hours, evaporating $570 million; these people thought they could withstand the volatility, but ended up as victims of a chain of liquidations.
The real problem is that leverage makes you lose the room for error. In spot trading, you can relax after a loss, but the 'countdown' for a leveraged position keeps running: insufficient margin? Forced liquidation; price spike? Forced liquidation; even the contract funding rate can slowly eat away at your principal. That's why I always advise beginners: don't use more than 5x leverage, and don't let a single position exceed 5% of your total capital.
Surviving is more important than making quick money.
The harsh truth of the crypto world is: opportunities are always there, but capital does not regenerate. Those who can survive long-term rely not on a single gamble, but on 'cautious development':
Invest with spare money: only money that won't affect your life when lost can keep you calm;
Build positions in batches: don't always try to catch the bottom, use dollar-cost averaging or staggered buying to spread the cost;
Stop-loss discipline: set hard stop-losses, for example, decisively exit if losses reach 2% of your principal;
Hedge risks: mainstream coins (like BTC, ETH) should occupy the bulk of your positions, while altcoins should be tested with small amounts.
Remember, leverage itself is not original sin, but heavy positions + high leverage = suicidal speculation. The market does not pity gamblers; it only rewards those who respect risk.
(This article represents personal views only and does not constitute investment advice. Trading involves risks; decisions should be made cautiously.)
Follow me@币圈罗盘 Next time I'll take you through the underlying logic of contract strategies, helping you avoid detours and earn real money!#巨鲸动向 $BTC $ETH
