A week ago, a fan with the ID @CoinSeaSinking sent a desperate private message late at night: "Sister Xiaobai, I have been liquidated 6 times in the past three months, with nearly all of my 52,000U capital gone... now my account only has 482U, is there still a chance for a comeback?" This heartfelt confession unveils the common scars of countless traders. By reviewing his trading log, I identified three major fatal traps — they are not only technical mistakes but also concentrated explosions of human weaknesses.
One, multiple liquidations: The red alert of a collapsed risk management system
Continuous liquidations are by no means accidental:
1. The vicious cycle of uncontrolled leverage Opening a long position of 10,000U on ETH without setting a stop-loss during a 20% pullback, leading to forced liquidation; to quickly recover, the second trade directly opened a 50x leverage, falling into the deadlock of "loss → add leverage → re-loss". Data shows that 83% of consecutive liquidations began with the lack of a stop-loss on the first order (BitMEX 2024 Risk Management White Paper).
2. The fatality of systematic loopholes The account has three major loopholes: no position calculation tools, ignoring volatility thresholds, confusing hedging strategies with arbitrage. When the market experiences a "black swan" volatility (like the Luna event-level crash), such accounts have a survival rate of less than 7%.
Case Insight: The solution of the championship @Risk Management Shield in a real trading competition: Establish a "3-level circuit breaker mechanism" — suspend trading for 1 hour if a single loss >5%, mandatory review if daily loss >10%, and liquidate for learning if weekly loss >15%.
Two, capital shrinkage: the cognitive trap of a gambler's mentality
The plunge from 50,000U to 500U triggered the "loss aversion effect" in psychology:
1. Three stages of behavioral distortion
Revenge trading: Immediately opening a short position after liquidation, attempting to "teach the market a lesson";
All-in syndrome: Going all in on high-volatility MEME coins (e.g., PEPE, WIF);
Self-deception: Switching the "recovering" goal to "turnaround", ignoring the probability disadvantage.
2. Neuroeconomics verification Experiments by the London Trader Association show that after losses, the activity of traders' prefrontal cortex decreases by 40%, while the amygdala (emotion center) activity surges by 200%, rational decision-making ability is physiologically suppressed.
Three, the brutal truth of turning around with a very small principal
Challenge to recover with 500U, need to overcome three major hurdles:
Success rate: require 22 consecutive 100% win rates, grid oscillation arbitrage (annualized 40%-70%)
Time cost: average daily watching 9.3 hours, automated scripts + alert triggers
Mental exhaustion: 87% give up midway, meditation training + limit 3 operations per day
Four, the four survival rules for reconstructing trading systems
1. Risk management toolization Use alerts linked to the exchange API to automatically reduce positions on price breakthroughs/liquidation ratios (refer to the mentioned automation tools);
2. Capital partition management Use the "three-account system": main account (70% low-leverage trend positions) + satellite account (20% arbitrage) + experimental account (10% high risk);
3. Cognitive Behavioral Therapy (CBT) Establish a trading emotion diary: record the fear/greed index (1-10) before each trade, and when the score >7, enforce a delay in placing orders;
4. The rebirth path of micro-accounts
Phase 1 (500U→2000U): Low slippage perpetual contract grid (e.g., BNB/USDT 0.5% range)
Phase 2 (2000U→10,000U): Volatility arbitrage (sell contracts when IV >100%)
Phase 3 (10,000U+): Multi-asset hedging portfolio
Five, the ultimate insight forged from blood and tears
The essence of the market is a human nature alchemy furnace. @CoinSeaSinking ultimately chose to suspend trading, hoping to wash away past mistakes in three months, work hard to learn techniques, improve self-awareness, and save money, looking forward to a comeback in the future!
Six, how to improve your awareness?
My original article (sharing my predictions of reaching the peak on May 23, the second peak on June 2, the bottom at 100718 on June 6, reaching the peak on June 11, and the crash on June 17! Remember to copy the homework!) is worth serious study by every fan.
I suggest everyone study the following self-media theories that I emphasized: [A high-win-rate trading model], [Wave Theory], [Chande's Theory], [Gann Theory], [Wyckoff Method], etc., so that your bragging skills can be even higher!
Please consciously read my quality tutorial article in the self-media below (A high-win-rate left-side spot trading model (Part 1)), it will benefit you tremendously!
One must be strong to forge iron; only by improving one's awareness can one successfully navigate through bull and bear markets. We focus on knowledge sharing, cultivating independent thinking, learning and accumulating in bear markets, and becoming someone else's dream in bull markets. We welcome like-minded individuals who share our values and are willing to learn and cultivate independent thinking abilities; only when you transform this knowledge and skills into your own accumulation can you possess the ability to think independently and avoid becoming the green chives!