New to the market and afraid of liquidation?

Then come see how the experts handle it.

In cryptocurrency contract trading, avoiding liquidation requires a multi-dimensional approach that includes risk control, position management, and operational strategies. The core is to allow the account to withstand price fluctuations. Here are the specific operational methods:

1. Strictly control your position and avoid full position trading

- Margin trading's leverage is essentially “small bets for big gains,” but high leverage means high risk. It is recommended for beginners to use leverage of no more than 5 times, and for seasoned traders, no more than 10 times.

- The position size of a single asset should not exceed 20% of the account balance. For example, with a principal of $10,000, the single contract opening amount should not exceed $2,000, leaving enough funds to deal with fluctuations.

2. Set reasonable stop-losses and strictly adhere to discipline

- Set stop-loss points simultaneously when opening a position, determining the range based on the asset's volatility (for example, set 3%-5% for BTC, and 5%-8% for smaller coins). Once the stop-loss is triggered, close the position immediately to avoid further losses.

- If manually setting a stop-loss, plan a psychological stop-loss level in advance. Act decisively when the price approaches this level to avoid hesitation that could lead to liquidation.

3. Utilize the margin mechanism to timely add margin and prevent liquidation

- Closely monitor the “maintenance margin rate.” When the account margin approaches the critical value, timely add margin to raise the liquidation price line.

- Avoid holding positions during periods of extreme market volatility (such as non-farm payroll data releases or regulatory policy announcements), as price differences may trigger liquidation instantly.

4. Hedge risks with counter-trading

- If your position direction is contrary to market trends, consider opening a counter-contract with a small position to hedge, locking in some losses, and adjusting the direction after the market stabilizes to reduce account pressure.

- Hedging positions should not be too large; the goal is to “buffer risks” and avoid turning into dual losses.

5. Choose compliant platforms and utilize tools for assistance

- Prioritize using platforms that support “automatic position reduction mechanisms” and “forced liquidation protection.” Some platforms will trigger alerts before liquidation to allow for operational time.

- Use limit orders instead of market orders to open positions, avoiding slippage that increases the actual holding cost and indirectly reducing the probability of liquidation.

In summary, the core of contract trading is “survival” rather than “huge profits.” Strictly implement risk control rules, it’s better to miss opportunities than to take the risk of liquidation, so that you can survive long-term in a high-volatility market.