Why do 90% of contract players end up losing everything? Because they simply do not understand how to cut losses! I've seen too many people follow the fishing song, turning 100,000 into 1,000,000, but due to luck, they fail to cut losses on one trade and end up quitting. Some even borrow to trade cryptocurrencies, ultimately accumulating massive debts.
Today, a fan happened to blow up their account due to not setting a stop loss and suffered a loss of 2,000,000. Taking this opportunity, I want to talk about the importance of cutting losses. Below is my real experience of blowing up 2 accounts:
In March 2023, BTC rapidly rose from 28,000 to 31,000. I shorted with 5x leverage, thinking, 'I'll close the position after a pullback.' As a result, the price kept rising to 35,000, and I got liquidated!
In January 2024, when SOL broke 120, I chased with 10x leverage, planning to 'close the position after breaking the previous high.' Suddenly, the price plunged to 98, and once again, I got liquidated to zero!
The painful lesson tells us: Holding onto a position once may be lucky, but holding ten times will definitely lead to a disastrous loss. All liquidation tragedies start with 'just wait a bit more.'
2. Stop Loss Techniques (Survival Edition)
Three-Second Stop Loss Rule (Essential for Beginners)
You must set a stop loss within three seconds after opening a position.
The stop loss margin is the inverse of the leverage multiple (for example: with 20x leverage, the stop loss margin is set at 5%).
Example: Opening 10,000 U with 20x leverage, the stop loss is set at 500 U (i.e., 5%).
Dynamic Stop Loss Strategy (Advanced Edition)
When profit reaches 5%, immediately move the stop loss to the cost price.
When profit reaches 10%, adjust the stop loss to the position of 5% profit.
When profit reaches 20%, further adjust the stop loss to the position of 15% profit. (Just like saving a game, profits absolutely cannot be taken back by the market.)
3. Practical Case: How to Use Stop Loss Strategies to Steadily Capture the Entire Market Movement
May 2024 ETH Trading Practice:
Open a long position at 3600 points, with 20x leverage, initial stop loss set at 3520 points (2.2%).
After rising to 3700 points, adjust the stop loss to 3620 points (break-even).
When the price further rises to 3800 points, raise the stop loss to 3720 points (locking in 3% profit).
Ultimately, the market surged to 4100 points, and by continually adjusting the stop loss, I successfully captured the market movement, with an actual risk of only 2%.
4. Stop Loss Advice
Cutting losses is not admitting defeat, but a rational tactical retreat.
All successful traders have experienced liquidations; their advantage lies in their quick stop losses.
The cryptocurrency market is always full of opportunities; what’s lacking is the capital that allows you to hold on until the next opportunity!
