Newbie playing contract liquidation? 90% is due to these 5 fatal mistakes!
Clearly following the "expert" operations, why do you liquidate as soon as you play contracts? In fact, the problem may lie in these 5 key points below. Avoiding them is essential to surviving before talking about making money!
1. Leverage is too high, cannot be controlled.
- Problem: Newbies always want to "double up in one go," opening positions with 50x, 100x high leverage, resulting in direct liquidation with a 1% market fluctuation.
- Data comparison:
- 5x leverage: allows for a 20% fluctuation, low liquidation probability
- 10x leverage: allows for a 10% fluctuation, medium liquidation probability
- 50x leverage: only allows for a 2% fluctuation, extremely high liquidation probability
- Correct approach: Newbies are advised to start with 3-5x low leverage for stability.
2. No stop loss, holding on until the end
- Classic death method:
- "Just wait a bit, it will go up again" → Result: the losses keep increasing.
- "Lost 50%, cutting losses is too painful" → Ultimately loses 100%.
- Correct approach: Set a fixed stop loss point (e.g., 3%) immediately after opening a position, and use a trailing stop loss (gradually raising the stop loss line to lock in profits after making gains).
3. Full position gamble, zero out in one go
- Wrong mentality: "Opportunities are rare, All in!" or "Just play this one," resulting in market reversal and direct zeroing out.
- Position management formula:
"Maximum single position = Capital × 2% / Leverage"
- For example: 10,000 U capital, 10x leverage, single position not exceeding 200 U
- Correct approach: Single trades should not exceed 5% of total capital, diversify investments to avoid putting all eggs in one basket.
4. Emotional trading, chasing highs and selling lows
- Typical performance:
- FOMO (Fear of Missing Out): chasing high positions during surges, resulting in buying at the peak.
- Panic selling: selling at low prices during crashes, just to see a rebound immediately after selling.
- Data: >80% of liquidations occur during extreme market fluctuations, due to emotional control leading to erroneous operations.
- Correct approach: Plan the trading strategy in advance and implement it strictly, avoid staying up late monitoring the market to reduce emotional interference.
5. Not understanding exchange tricks, getting "spiked" and liquidated
- Common tactics:
- Spike: Price suddenly plummets/rises, triggering a large number of stop-loss orders before quickly returning to the original price.
- Slippage: Under extreme market conditions, the actual transaction price differs greatly from the expected price.
- Correct approach: Choose mainstream, reputable exchanges, and avoid trading during major news events or extreme market fluctuations.
Core Summary: Contract trading is not gambling!
