Are you a beginner playing contracts and facing liquidation? 90% of the time it's due to these 5 fatal mistakes!
Clearly following the operations of the 'experts', why do you liquidate every time you play contracts? In fact, the problem may lie in these 5 key points below. Avoiding them is essential to survive before discussing making money!
1. Too high leverage, impossible to control.
- Problem: Beginners always want to 'double up', opening positions with 50x or 100x high leverage, leading to liquidation with just a 1% market fluctuation.
- Data comparison:
- 5x leverage: allows for a 20% fluctuation, low liquidation probability
- 10x leverage: allows for a 10% fluctuation, medium liquidation probability
- 50x leverage: allows for only a 2% fluctuation, extremely high liquidation probability
- Correct approach: Beginners are advised to start with low leverage of 3-5x, prioritizing stability.
2. No stop-loss, holding on stubbornly
- Classic way to die:
- 'Just wait a bit, it will come back' → Result: losses keep increasing.
- 'Lost 50%, cutting loss is too painful' → Ultimately lose 100%.
- Correct approach: Set a fixed stop-loss point immediately after opening a position (e.g. 3%), and use trailing stops (gradually moving the stop-loss line up to lock in profits after gaining).
3. Full position gamble, everything goes to zero
- Wrong mentality: 'Opportunities are rare, All in!' or 'Just play this one', results in market reversal and direct zeroing out.
- Position management formula:
"Maximum single position = Capital × 2% / Leverage multiple"
- For example: 10,000 USDT capital, 10x leverage, single position not exceeding 200 USDT
- Correct approach: Single trades should not exceed 5% of total funds, diversify investments to avoid putting all eggs in one basket.
4. Emotional trading, chasing highs and lows
- Typical manifestations:
- FOMO (Fear of Missing Out): Chasing high positions during a surge, resulting in buying at the peak.
- Panic selling: Selling at low prices during a crash, only to see a rebound immediately after selling.
- Data: >80% of liquidations occur during severe market fluctuations, caused by emotional control failures leading to wrong actions.
- Correct approach: Prepare a trading plan in advance and strictly execute it, avoid staying up all night watching the market, reduce emotional interference.
5. Unfamiliar with exchange tricks, getting liquidated by 'spikes'
- Common tactics:
- Spike: Price suddenly drops/rises, triggering a large number of stop-loss orders, then quickly reverting to the original price.
- Slippage: Under extreme market conditions, the actual transaction price differs greatly from the expected price.
- Correct approach: Choose mainstream, reputable exchanges and avoid trading during major news events (such as Federal Reserve meetings) or extreme market fluctuations.
