When crypto whale James Wynn got liquidated for $100M in a single move, the shocking part wasn't the loss - it was how it happened.
The Setup:
- Experienced trader
- Conservative leverage
- Normal market conditions
The Trap:
A sudden, isolated price wick on one exchange triggered his liquidation. No market-wide movement. No news. Just a perfectly timed flash dip.
The Truth:
This was *liquidation hunting - where exchanges/market makers:
1. Identify large positions
2. Force price to liquidation points
3. Profit from forced sales
How to Protect Yourself:
- Use lower leverage
- Diversify across exchanges
- Watch for unnatural wicks
- Remember: Your stop-loss is someone's profit target
