The Cruel Truth of Mandatory Stop-Loss in Cryptocurrency Trading
Market volatility far exceeds traditional fields
Cryptocurrency daily fluctuations often reach 20%-30%, and in extreme cases, weekly declines exceed 60%. In leveraged trading, price fluctuations are magnified by 10-100 times, and orders without stop-loss have a 99% liquidation rate.
Case Study: A certain altcoin dropped from 1 to 0.2 in just 3 hours, causing 5x leveraged users' principal to go directly to zero.
Stop-loss is the only rule for survival
Even if you accurately identify trends, sudden black swan events (such as policy crackdowns, exchange crashes) can still lead to liquidation.
Data: 2025 data shows that leveraged traders who do not set stop-loss have an average survival period of only 3 days.
Scientific Methods for Setting Stop-Loss
Capital Stop-Loss: Control a single loss within 1%-3% of total capital (for a 10,000U account, single loss ≤ 300U).
Technical Stop-Loss: Combine support levels (automatically exit if key support level is broken by 3%) or moving averages (e.g., stop-loss if 20-day moving average is breached).
Dynamic Adjustment: Move up the stop-loss point after making a profit (e.g., trailing stop-loss to lock in 50% profit).
The Death Trap of Leveraged Trading
Under 10x leverage, a 10% reverse price fluctuation results in liquidation; only a 2% fluctuation is needed for 50x leverage [^User Case].
Counterintuitive Conclusion: High leverage ≠ high risk, high leverage without stop-loss = suicide.
Human Weaknesses and Discipline Execution
Common Characteristics of Liquidation Seekers:
Blindly trusting 'insider information' or candlestick patterns, ignoring stop-loss
Fantasy of rebound when losing, greedily increasing positions when profitable
Solution: Use machines to execute stop-loss (such as exchange conditional orders), avoiding emotional interference.
The market will not stop fluctuating because anyone 'fears a drop.' The essence of stop-loss is to acknowledge 'I might be wrong' and to use rules to counter human nature. Remember: Survival > Profit, Discipline > Prediction.
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