Crypto Liquidation Explained: Why Traders Lose Accounts in Seconds 🚨
During high crypto volatility, you often see headlines about millions being liquidated in hours. But what does liquidation really mean?
What is Crypto Liquidation?
Liquidation happens when a leveraged position loses too much, and the exchange automatically closes it to prevent your account from going negative. Essentially, the exchange is protecting both you and the system.
Why Traders Get Liquidated Fast ⚡
High leverage = high risk: 50x or 100x leverage means a small price move can wipe your account.
Instant market swings: Even a few candles in a low timeframe can trigger liquidation.
Wrong margin mode: Cross margin risks your full balance; isolated margin limits losses per trade.
How to Reduce Liquidation Risk ✅
Use lower leverage (2x–5x) for more room to breathe.
Always set stop-losses.
Break down positions and limit risk per order.
Monitor funding rates — they quietly eat your margin.
The Real Danger: Psychology
After liquidation, traders often fall into revenge trading, burning their accounts even faster. Surviving the market matters more than chasing quick profits.
Bottom Line:
Liquidation isn’t the enemy — poor risk management is. Learn to control leverage, use stop-losses, and prioritize survival over fast gains. 💡
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