After a 20 million liquidation, I finally realized: Is trading contracts a guaranteed death?

I woke up at 4 AM the night before to use the bathroom and habitually opened my phone in the dark to check the cryptocurrency market. I saw my good friend Q哥 had sent several WeChat messages and made a few voice videos.

He opened a long position with 2500 Ethereum contracts, with an average opening price of 2056 and a liquidation price of 1576. On the eve of Black Monday, the crypto market crashed ahead of time, with Ethereum dropping 17%. When I opened my phone, the price I saw for Ethereum was 1616, just 40 dollars away from liquidation!!!

He started to go long on Ethereum at 3500, adding to his position as it fell, totaling 2.7 million USDT invested, and now only 200,000 USDT remains. He always believed he had ample funds outside the market to average down, convinced he wouldn’t get liquidated no matter what.

Yesterday noon, he came to discuss the next strategy with me. He frowned deeply, having not rested well the night before, and the immense mental pressure left him weary, eyes filled with both reluctance and regret.

My advice to him was to stop averaging down, to pull back from the cliff, protect his principal, and return to safety. There are still 2 million USDT outside, suggesting he should gradually buy Bitcoin at the bottom, using time to gain space; otherwise, no matter how strong his ability to make money outside, he would still face liquidation to zero.

He listened to my advice; the liquidation price was 1505, and the current price was 1551, with a holding of 2560 Ethereum contracts. If this trade is going to liquidate, so be it; he would not average down again.

While we were eating, Ethereum dipped again, hitting 1412, and his tenfold long position was inevitably liquidated to zero. Although 2.7 million USDT was just a part of his total assets—not too big or too small—and he still has strong earning capacity, at the moment of true liquidation, his hands trembled slightly. He stared at his phone in silence for ten seconds, then calmed down, saying he felt relieved inside. He truly is someone who has weathered the storms.

Do you ask if I feel regret? Of course, I feel regret.

If you ask if I would regret it, I believe that even if I had the chance to do it all over again, I would still give that same advice. Although 2.7 million USDT is a hefty price to pay to stay away from contracts for a lifetime, I think it's worth it when viewed over the long span of decades of life.

I’ve seen internal data revealed by a friend from an exchange, showing that over 99% of contract users will liquidate within three months. If you can’t control yourself, it’s better to die early than late; dying early allows for rebirth sooner.