Want to avoid liquidation when trading contracts? Remember this trick: use isolated margin, don't touch cross margin!
In the crypto contract world, this is the most basic principle—never touch cross margin, isolated margin is the safer choice.
Why do I say this? Isolated margin allows you to flexibly adjust your margin and change your liquidation price, giving you more control over risk. Take 10x leverage as an example; in isolated margin mode, the liquidation price is clear, and you can adjust your position in batches, avoiding a situation where one wrong step leads to total loss.
A more intuitive example:
A certain coin is currently priced at 100 USDT,
using 10x leverage, the liquidation price is likely to fluctuate within a range of 10 USDT up or down;
using 20x, the liquidation price shrinks to a range of 5 USDT up or down, making it dangerous with slight fluctuations;
if using 2x, the liquidation price can be relaxed to a range of 50 USDT up or down, providing much more space and making it less likely to face forced liquidation.
In fact, spot trading is equivalent to 1x leverage; if it drops to zero, you can only lose 100 USDT, which is similar to the situation of liquidation at 1x leverage.
There is really no fixed pattern for leverage; the key is to adjust flexibly according to market conditions.
For day trading, leverage can be a bit higher, but it should be calculated based on recent high and low price differences. If the market fluctuates by several thousand points, reasonable leverage settings will keep the liquidation price far from you.
For medium to long-term trades, it’s different; with a longer time frame, market fluctuations can be large and unpredictable, so leverage must be lowered to leave enough buffer space.
Different coins have different situations, and leverage must also be adjusted accordingly. For instance, with popular coins, a daily fluctuation of 30% is common; if you stubbornly stick to 20x leverage, it's no surprise if you face liquidation.
Many novices trip up on these details, focusing solely on high leverage and ending up losing money in confusion. So don't just keep an eye on indicators; the market changes quickly, and leverage should follow the market conditions and cycles. Understanding how to calculate the liquidation price and how to adjust positions is key.
If you also want to understand how to use leverage flexibly and find a suitable opening strategy for your trading cycle, following me is definitely the right choice.
