In a market with poor liquidity, stop-loss strategies are a core tool for controlling risk for the following main reasons:

First, price fluctuations are severe and unpredictable. Lack of liquidity can cause significant price swings with a small amount of capital (such as flash crashes or surges), and without setting a stop-loss, sudden fluctuations may rapidly expand losses. For example, obscure stocks or small-cap cryptocurrencies may plummet by more than 20% in an instant due to a large transaction.

Second, difficulties in executing trades exacerbate losses. When the bid-ask spread is large and market depth is insufficient, stop-loss orders are prone to slippage or may even fail to execute. If the stop-loss price is set at 100 yuan, but there are only buy orders at 90 yuan in the market, the actual loss may far exceed expectations. In extreme cases, liquidity depletion can cause stop-loss orders to become completely ineffective.

Third, market manipulation and psychological traps coexist. Large players may deliberately suppress prices to trigger retail stop-losses, and then reverse and push prices up for profit. At the same time, once prices drop, there may be a long-term lack of buying interest, causing investors to fall into a “holding on” mentality, ultimately leading to deep losses.

Fourth, the risk of leveraged trading multiplies. High leverage combined with low liquidity can accelerate liquidation, and slight reverse price fluctuations may result in total loss of principal due to the inability to close positions in time.

Response strategies: Use limit stop-loss orders to control slippage, widen the stop-loss range based on volatility; observe market depth before trading to avoid heavily investing in low liquidity assets; set stop-losses at key support levels to reduce interference from random fluctuations.

Markets with poor liquidity are like narrow corridors, making it difficult to escape during sudden fluctuations. Stop-losses are not just risk control tools, but rules for survival—planning an “escape route” in advance to avoid falling into irretrievable losses due to liquidity depletion. #加密市场反弹