Many traders often fall into the same mistake — using all their capital to open a position, thinking that 'big bets yield big returns'. But in reality, this is the leading cause of account blowouts in just a few minutes, especially when a stop-loss point is not set.
Using the entire account for trading is no different from a door without a safety lock: just a slight market reversal can lead to liquidation happening much faster than when using a small portion of the capital. The danger does not lie in the leverage level, but rather in the excessively large position size.
Simple example:
Suppose the account has 1000 USDT.
If using 900 USDT to open a position with 3x leverage, just a 5.6% drop in price will cause the account to be liquidated.
But if only using 90 USDT with the same level of leverage, the market must drop by 88.9% to lose all capital.
This shows that reasonable position management can increase risk tolerance by more than 15 times.
To avoid falling into the tragedy of 'burning out' just because of one wrong trade, the following three safe trading principles can be applied:
1. Limit the maximum position to 8% of the total capital for each trade.
Only use a maximum of 8% of the total account for one trade.
For example, with an account of 8000 USDT, only invest a maximum of 640 USDT.
Even if the market goes against you and you set a stop loss at 8%, the lost amount is only 51.2 USDT, which hardly affects the total capital.
2. Limit the loss for each trade to no more than 1.2% of the total account.
Before opening a trade, a clear stop loss must be set.
For example: with a position of 640 USDT using 3x leverage, if setting a stop loss at 1%, the maximum loss is 38.4 USDT, equivalent to 1.2% of total assets.
This rule helps avoid the situation of 'holding losing positions' and protects the trader's psychology when the market fluctuates sharply.
3. Avoid trading during periods of unclear market trends.
When the market fluctuates wildly, with no clear signals, it is best to stay on the sidelines and observe.
Do not try to 'catch the top and bottom,' and absolutely do not increase the position even when in profit — because the market can reverse at any time.
These three principles may seem simple but are the core of risk management in leveraged trading.
It is not necessary to win on every trade; just maintain capital and discipline, and the trader can survive long-term and grow sustainably.
The market always offers new opportunities — as long as your account is still intact.