At a glance, it's my cousin from back home, the crying tone in the voice message is about to overflow: "Sister! I put all 6000 small U in, opened a 3x long position, just dropped 4 points, the screen turned red to black instantly, and the money is gone! How could it be so fast?"
I rubbed my temples and opened the screenshot he sent. Goodness, 6000 U not a cent left, all in at once, and the stop-loss line is as clean as freshly cleaned glass. Watching this operation made me smack my thigh—so many beginners make this mistake: always thinking "going all in on small fluctuations is no problem," but trading all in is like riding an electric bike without brakes; even a small pebble on the road can throw you off, much faster than the speed of a gradual entry into the market leading to liquidation.
In fact, a total liquidation of the whole account is really not the fault of leverage; it's because the position is too full to hold. Let me break it down for you: with a 5000U account, if you take 4000U at 3x leverage, and the market moves against you by 3 points, you get liquidated immediately; but if you only take 500U at 3x leverage, even if the market swings up and down by 25 points, the principal remains as steady as an old dog. My cousin has put all his assets on the line, and with 3x leverage, a 4-point drop is simply 'a push and it falls'.
That said, total liquidation isn't impossible; after trying it myself for over half a year, I summarized 3 principles. Not only did I avoid liquidation, but I also made a decent profit, and at that time, I explained it in detail to my cousin via voice message.
①Only use 8%-10% of the principal for each trade; don't add a single extra bit. Just like my cousin's account with 6000U, the maximum he invests at once is 500-600U. Even if it hits the stop-loss, the loss is just 'a small bite', so it won’t completely deplete the principal. Keeping some capital means you can always earn it back.
②The maximum single loss should not exceed 0.8%. For example, if you take 500U at 3x leverage and set a 1% stop-loss in advance, even if the stop-loss is triggered, you would only lose 15U, which is only 0.25% of the total principal. This level of risk is like a tickle; it’s completely controllable. Once, I didn’t follow this rule and ended up losing 200U, and it hurt so much that I didn’t dare to drink milk tea for three days.
③If the market is sideways for more than 3 days, don't touch the whole account. If the market is directionless like a headless fly, don’t be tempted to join the chaos—wait for the daily line to give a clear trend signal before entering. I suffered losses from a sideways whole account last year, getting cut three times back and forth; it was only after holding out for the trend that I managed to earn back what I lost.
Previously, my downstairs neighbor Xiao Zhou had to clear his account once a month due to total liquidation, just like paying rent on time. Later, he kept asking me for trading notes, and by following these 3 principles, his account of 4000U slowly increased to 5200U over two months. The last time I ran into him, he patted me on the shoulder and said: 'I used to think total liquidation could earn money quickly, but now I understand that protecting the principal from loss is the first step to slowly filling my pockets; it was all just meaningless fuss before!'
To be honest, how often do you hear about 'sudden liquidation' in trading? Most of the time, it's due to not following the rules and being greedy and impatient. Total liquidation is not something that can't be done, but never treat it as a tool for a 'big gamble'. Follow the principles, control the risk, and then earning money will feel solid.
I usually share practical trading strategies and risk control tips here. Follow me, and when you encounter the frustrating situation of 'money gone' next time, we can avoid pitfalls and make more money. Have you ever had an experience of stepping into pitfalls with your whole account? Let's chat in the comments, and I’ll help you analyze where the problem lies!
