Many novice traders wake up one day to find that their positions are gone, as they were automatically liquidated!

For these cryptocurrencies that experience sudden spikes and drops, even if you set stop-loss orders, sometimes they can still be liquidated. A beautiful friend of mine lost quite a bit of money because of this, which is truly heartbreaking.

I've been in the derivatives market for a while, and I have some insights to share that I hope can help everyone stay safe!

First of all, at the moment you open a position, you must set your stop-loss level. Whether it's a low leverage or high leverage, once it falls to a level you can't bear, you must stop loss.

This is the key to survival; don’t always think about holding onto your position. Sometimes you might be able to hold on, but the risk is too great. If you go in the wrong direction, having a stop-loss is essential. Learn to stop-loss, and you can live long! Just one mistake in holding a position could mean going back to square one, and I really don’t want you to experience that pain.

Secondly, don’t go all-in on your contracts. Open only one or two positions at a time; if you open too many, the liquidation price becomes uncertain. If a cryptocurrency crashes or skyrockets in the opposite direction, other positions could also be liquidated along with it.

If you need to open multiple positions, choose isolated margin, but you can’t do scalping with isolated margin, which I don’t prefer.

Next, always set a stop-loss before the liquidation price to avoid being liquidated to zero. For example, if the liquidation price is 2731, set a stop-loss at 2730.5. After the stop-loss of a 100 units position, your account might still have about 30 or 40 units left. If you don’t set a stop-loss, your remaining funds could all go to the liquidation fund, which would mean going to zero.

Binance’s slippage is okay; under normal circumstances, stop-loss orders rarely get liquidated.

Finally, don’t keep too much capital in your derivatives account to avoid being liquidated to zero due to extreme market conditions. For example, if you opened a 100 units position today, with a capital of 300 units and set a stop-loss to lose 100 units, you would lose a maximum of 300. But if you have 1000 units in your derivatives account and the same 100 units position with a stop-loss of 100 units, you could lose 500 units or even get liquidated to zero.

These are all the bloody lessons I’ve learned in the derivatives market, and I hope everyone can take them as warnings!

In the cryptocurrency world, opportunities and risks coexist; staying vigilant and finding the right timing is key. I’ve also discovered a short-term skyrocketing project with huge potential for doubling! If you want to keep up, follow me for free sharing!