Leverage is not the devil; holding onto losing positions is — A survival guide for all contract players
It’s never the leverage that leads to liquidation, but rather your complacency.
The essence of leverage: Tool or weapon?
Correct usage:
10x leverage = 10% volatility doubles or goes to zero
50x leverage = 2% volatility doubles or goes to zero
Incorrect usage:
After opening a position, play dead and set no stop-loss
Crazy averaging down during unrealized losses, fantasizing about breaking even
Holding on during profits and refusing to let go, ultimately turning into losses
$1000 at 10x vs $2000 at 5x? The liquidation line is the same; the difference is whether you can calmly execute your plan.
The three fatal wounds of holding onto losing positions
Emotional hijacking
Already lost 30%, now cutting will hurt too much > Resulting in a 70% loss
Sunk cost fallacy
Averaging down leads to your entire position being trapped
Opportunity wastage
Holding onto losing positions causes you to miss real good opportunities
Case study:
A user went long at BTC 68,000, holding until 63,000 and getting liquidated
If they had cut losses and shorted instead, they would have made a 50% profit
High leverage survival rules
Capital allocation: Single position ≤ 10% of total capital
Stop-loss is as important as breathing:
3x leverage: Stop-loss at 5%
10x leverage: Stop-loss at 2%
50x leverage: Stop-loss at 0.8%
Withdraw profits: Take back the principal after earning 30%
Only by fighting with profits can you remain calm.
The four stages every beginner must go through
Ignorance and fearlessness: "$200 at 10x" > Zero in 5 minutes
Fear and avoidance: Cursing the market maker for wiping out retail traders after liquidation
Blind learning: Collecting 100 indicators but still losing
Awakening and rebirth:
Acknowledging that the market is always right
A losing position should never exceed 5 minutes
The distance from gambler to trader is just a stop-loss button away.
Mental framework
First, use spot trading to earn money within your knowledge limit
Then use profits to trade contracts and practice mindset
Finally, leverage to amplify returns
If you can’t even read candlesticks, why go all in? At least Macau offers free milk tea.
Remember:
In the crypto space, choice is greater than effort!
Follow the right people, and making money will come naturally!
Like + Follow Longmen = Open the door to wealth!
