First, let's restore a scenario you must be familiar with:
You went long, confident that it would rise later.
As a result, the price first dropped a little.
The forced liquidation price was suddenly breached, and people were cleared out.
Just when you were cursing, the market turned around and rose, eventually reaching the target you originally expected.
At this moment, there is only one sentence in your heart:
"The direction was obviously correct, so why was I still taken down by the market?"
Today's article will specifically address this issue:
The direction was right, but I was forced liquidated; where did I go wrong?
How can I avoid the same fate in the future?
1. A very cruel statement:
The market doesn't just look at whether the direction is right, but more importantly, whether you can survive to that point.
The phrase "looking in the right direction" is used by most people.
This refers to: the starting point and the ending point.
I think it will rise to over 10%.
I think it will drop even further.
But what the market truly gives you is a complete path:
It might go against you for a while first.
Then go in the direction you want.
There were countless "washings" of people back and forth in between.
Forced liquidation of contracts is not about the end result, but about one thing:
Before reaching the finish line,
Did they erode your deposit before offering the price?
So the real problem isn't:
Are you heading in the right direction?
Instead:"Before it moves in the direction you expect, has your position been pre-judged as doomed?"
Second, the primary culprit: excessively high leverage and an absurdly low margin for error.
Many people only look at two things before placing an order:
How many positions can I open?
By the way, how much can I earn?
But they almost never look at a more crucial issue:
"How far in the opposite direction will I be forced to liquidate my position?"
Let's use a very rough example of perception (just to help you understand the logic):
10x leverage, long position
A price fluctuation of approximately 10% in the opposite direction would likely trigger a margin call.
20x leverage
If you reverse by about 5%, you're already on the edge of a cliff.
50 times, 100 times
Even 1%–2% of normal vibration could kill you.
The question is:
Is it normal for a cryptocurrency to fluctuate by 3%–8% within a day?
—That's perfectly normal.
What does that mean?
You used leverage of 10 times or more.
Within perfectly normal fluctuations
That's enough to get thrown out of the game N times.
Then take another look at your mindset:
"I'm bullish on this stock, so why am I getting swept away?"
The answer is simple:
You didn't give yourself any time or space to "wait for the market to turn around".
Third, the second major culprit: extremely poor entry point – “buying at the peak of sentiment and selling at the bottom of sentiment.”
Another common situation is:
You're right.
But you areBuying in at a short-term local high
for example:
The price rose from 100 to 120.
You finally couldn't resist and rushed into a long position at the 118-120 level, a point where short-term acceleration was clearly underway.
The market's pullback to 112 and 110 is perfectly normal.
For a high-leverage long position like yours, this pullback is enough to force you to close it out.
If the price then rises from 110 to 130, you'll no longer be on the bus.
Therefore, you come to the following conclusion:
"I'm truly wronged. The direction was correct, but the market was targeting me."
In reality:
You invested heavily at the worst possible point.
You crashed in the most normal callback.
The direction is correct.
Position, leverage, and position size are all major issues.
Fourth, the third major culprit: You didn't use stop-loss orders; you left the stop-loss to the "margin call price."
Many people's actual operating procedure is as follows:
Before placing an order:
"I'll try it out first, and if it doesn't work, I'll cut my losses."
Market trend reversed:
"Wait a little longer, it might be a false drop."
Continue in reverse:
"Let's hold on a little longer, otherwise I'll really lose money if I cut my losses."
Near the margin call price:
The person was completely dazed and didn't even want to click.
Final result:
You are not "cutting your losses and exiting the market".
You have been "removed from the system".
The difference between the two is very large:
Stop your own losses:
How much do you decide to lose?
Where do you decide to admit your mistake?
System liquidation:
The platform helps you maximize the use of your margin.
You don't even have the chance to "leave gracefully".
Many people say:
"I have a stop-loss plan."
But in reality:
All orders were triggered by margin calls.
True "proactive stop-loss" happens only a few times a year.
Margin calls are a stop-loss order, and one of the ultimate reasons why people often lose money halfway through their trades even when they are on the right track.
Fifth, the fourth major culprit: Not understanding which timeframe you're trading within.
Classic plot:
You're looking at the daily and 4-hour charts for the overall trend.
The result was the use of high leverage + no stop-loss + intending to hold for several days.
The problem is:
Any trend on the daily/4-hour timeframe,
There will be very sharp pullbacks, price spikes, and market shakeouts along the way.
In the world of spot trading/low leverage, these are merely "processes".
But in the world of high leverage, these are:
"The final blow that wipes out your deposit."
You can't claim to be trading "swings/trends" at the same time.
On the one hand, they are using high-leverage contracts that can only withstand a 1%–2% drawdown.
This is like:
He said he wanted to run a marathon.
However, he was wearing shoes that were only good for sprinting 60 meters.
I get cramps as soon as I run.
Sixth, the fifth major culprit: Adding to losing positions, essentially pulling yourself towards the margin call price.
There is another type of operation that is "right in direction but results in a more devastating loss," which is as follows:
You see more
Prices have fallen, and you're experiencing a paper loss.
You're unwilling to accept this: "Add a little more to lower the cost."
If it falls further, add more.
Your margin is increasing, but the liquidation price is also quietly moving closer to your current price.
It will eventually become:
You could have withstood a pullback for a while.
You kept buying more shares until it became:
It will explode if it goes down just a little bit more.
You weren't killed by the market.
It was through our own actions that we gradually eroded our safe distance.
7. So how can we avoid "being right in the direction but still dying from forced liquidation"?
Having discussed so many pitfalls, here are some practical suggestions.
You can directly use this as your own "list of defenses against forced demolition".
✅ Recommendation 1: Before placing an order, ask one question first—
"How many steps backward will I need to take before I explode?"
In the future, when you place an order, don't just look at "how much you've earned" in the profit and loss simulation chart:
I must take another look:
How much margin do you currently have?
What is the current leverage ratio?
Approximately how many percent is the margin call price from the current price?
Then ask yourself:
Is this level of reverse volatility "perfectly normal" for this coin?
If the answer is:
"Absolutely normal"
This order is a typical example.Death speed too fast。
Whether the direction is right or wrong is no longer important.
You're sitting in a car that could flip over at the slightest touch.
✅ Recommendation 2: Remove "margin call" from your vocabulary and only keep "stop-loss".
Set a firm rule for yourself:
Never wait for your account to be liquidated, nor should you use a liquidation as a stop-loss measure.
The method is very simple:
For each order, a stop-loss price is planned in advance.
The loss corresponding to this stop-loss only accounts for a small portion of the total capital.
If the stop-loss order is triggered, accept it, get out, don't stubbornly hold on.
You will find:
If you simply remove the "margin call" option,
The frequency of dying halfway through a journey even when the direction is right will decrease significantly.
✅ Recommendation 3: Avoid the suicidal combination of "high leverage + long holding time".
Remember this simple combination taboo:
The longer the time frame, the lower the leverage should be.
You want to take it for a few hours or even a few days:
Behave yourself with leverage.
Allow room for normal market fluctuations
If you really want to play at high stakes:
Therefore, the position size must be extremely small.
Holding time must be extremely short.
And you need to monitor the market.
Don't do such a shady thing:
Enter at 50x
Go to sleep or go to work.
Entrusting life and death to the market
This isn't a transaction; it's opening a box.
✅ Recommendation 4: Shift the focus of "entry point" from emotions to structure.
Next time you say "I'm looking in the right direction",
Please add a sentence:
"Where should I enter?"
A few simple criteria:
Try to avoid:
Heavy buying after a large bullish candlestick with high volume has just finished rising.
Heavy short selling after a sharp drop following an extremely long bearish candlestick.
Choose the following:
Retrace to near support level, stabilize and then confirm.
Only consider following the trend after the price breaks through the key structure and stabilizes above it.
The price at which you place this order is more important than whether you are bullish or bearish.
✅ Recommendation 5: Give each trade its own life using "isolated margin trading + small positions".
Instead of putting all your money into a "full margin" strategy,
A safer way is:
Use individual warehouses
Give each position a clearly defined "maximum acceptable loss amount".
Even if we're wrong, it's just one case that fails, not the whole team going down with it.
That way, you'll have a chance:
Even after making a few mistakes, you can still survive, learn from your experiences, adjust your strategies, and gradually become stronger.
so
Direction is only part of the outcome; position sizing and survival are the prerequisites.
Finally, let me conclude with three sentences:
Forced liquidation is never because "you misjudged the direction once".
It's because you left too little room for error in the wrong direction.Even though the direction was right, I still got liquidated.
It's not called "the chosen one with bad luck".
It's called "zero systemic risk control".True traders
What I'm concerned about is "whether I can live long enough for the market to move in the direction I predicted."
Instead of getting yourself killed right at the start.
(Trading for Beginners 101) This series
It helps you uncover and clearly see all those pitfalls where "the direction seems correct, but you always die in the same way."
If you have already experienced this multiple times:
The direction was right, but they were forced out of the game by a draw.
Watching the market move as expected, yet only able to stand on the sidelines cursing one's bad luck.
Then come find me.
I can help you reshape your trading logic by focusing on leverage, position sizing, margin call price, entry point, and stop-loss mechanism.
Even if I occasionally misjudge the direction in the future, at least I won't "die so quickly".
As for whether you can get rid of "people who are frequently forced to liquidate their accounts"
To become "one of the groups that can survive stably in the market".
As I said before—
It depends on how much drive and self-discipline you put in.
