Why do you always get liquidated in the crypto world? 90% of retail investors have fallen into these traps
Leveraged Abuse: The Fatal Trap of Small Bets
The 'Double-Edged Sword' Effect of Leverage
In the crypto world, contract trading supports 10x, 20x, or even 100x leverage, but high leverage means high risk. For example, with 10x leverage, a 10% price fluctuation can lead to the total loss of principal; if using 100x leverage, a 1% fluctuation can trigger liquidation.
Data Support: Data from a certain exchange shows that traders using 100x leverage have an average survival time of less than 48 hours.
The Catastrophic Consequences of Full Margin Trading
Retail investors often operate on full margin due to 'greed' or 'luck' mentality, neglecting position management. Once the market fluctuates in the opposite direction, lacking funds for margin calls or stop-losses leads to immediate liquidation.
Counter-Trend Trading: Foolish Behavior Against the Trend
Misjudgment of Trend
The price fluctuations in the crypto world are extreme, and retail investors often trade against the trend due to the mentality of 'buying the dip and selling the top.' For example, shorting during an uptrend of Bitcoin or going long during a downtrend, ultimately being crushed by the market trend.
Data: Data on crypto contract liquidations shows that over 90% of liquidations occur during counter-trend trading.
Lack of Stop-Loss Discipline
Retail investors often refuse to set stop-loss orders due to 'fear of loss' or set stop-loss levels that are too wide. When prices fluctuate significantly, losses expand rapidly, leading to eventual liquidation.
Case: During the collapse of Luna in 2022, long positions without stop-losses lost over 97%.
How to Avoid Liquidation?
Use Leverage Wisely
It is recommended that the leverage ratio does not exceed 5x, and each trade position does not exceed 10% of total capital. For example, with a principal of 100,000, the maximum investment per trade should be 10,000.
Strict Stop-Loss
Set a stop-loss level of 2%-5% for each trade; for example, with 100,000 in capital, the maximum loss per trade should not exceed 5,000.
Follow the Trend
Use technical analysis (such as moving averages, trend lines) to determine the trend direction, avoiding counter-trend operations. For example, going long when the price breaks above the 20-day moving average and going short when it breaks below.
Control Trading Frequency
Limit trades to no more than 3 times a day to avoid emotional trading.
Yesterday, the LTC long position arranged for fans has welcomed a wave of substantial profits
LTC was entered at the price level of 68, and take profit at 78 made this fan very happy
The team opens trades daily and continues to profit. Friends who are confused and losing in trading, follow the steps of Brother Geng to reap the rewards!!