#How to Avoid Liquidation and Manage Losses

Many traders face a common scenario where the market trend reverses immediately after placing a trade. Despite a strong upward or downward trend observed over several hours, entering a position often seems to trigger an unexpected reversal.

As losses mount—reaching 25% or even 30%—traders tend to hold on, hoping the market will return to the expected value. But this emotional hold can result in even deeper losses—up to 50% or more—leading to a final desperate hope: either full recovery or complete liquidation.

Here’s how to avoid this trap:

1. Use Stop Losses: Always set a predefined stop-loss level to protect your capital. Never trade without it.

2. Position Sizing: Risk only a small portion of your portfolio (1-2% per trade) to absorb unexpected moves.

3. Avoid Revenge Trading: Don’t re-enter trades emotionally after a loss. Stick to your strategy.

4. Follow the Trend, Don’t Chase It: Avoid entering late in a trend. Wait for confirmation or enter during pullbacks.

5. Accept Small Losses: Taking a small loss is better than risking full liquidation. It keeps you in the game.

6. Journal and Reflect: Learn from each loss. Document what went wrong and adjust your approach.

Discipline, risk management, and emotional control are key to long-term survival in trading.