Account Liquidation in Futures Trading and How to Mitigate It
Account Liquidation in Futures Trading and How to Mitigate It There are two common reasons that can easily lead to liquidation: Significant market volatility exceeding the account balance.The asset reaching the liquidation price. 1. Case of exceeding the account balance For example, if you trade the $XRP /USDT pair with 20x leverage and have 500 USDT in your account, what is the maximum position you can open safely? Answer: The safe amount for placing orders must not exceed 20x the value of your
When the market is quiet, and then there's a price explosion (either up or down). In the case of the VIP I mentioned here, within just 3 minutes, the price increased by 6% and then paused, followed by a decline. When the market fluctuates rapidly, the immediate question while observing is: when will the max (or min) price of this volatility be reached? The answer at this point lies in the MFA (Money Flow Analysis) chart with a time window set to minutes. This can provide you with insights. When you see the chart peak and then plateau, it’s a strong indicator that cooling off is likely, and you need to make an immediate decision. In other cases, the chart may plateau for 1-2 minutes before continuing to rise and then leave the peak. From my experience, profit is the priority—it’s better to secure gains 100% of the time rather than aim for higher profits with more risk. What’s your opinion?
When the market is quiet, and then there's a price explosion (either up or down). In the case of the VIP I mentioned here, within just 3 minutes, the price increased by 6% and then paused, followed by a decline. When the market fluctuates rapidly, the immediate question while observing is: when will the max (or min) price of this volatility be reached? The answer at this point lies in the MFA (Money Flow Analysis) chart with a time window set to minutes. This can provide you with insights. When you see the chart peak and then plateau, it’s a strong indicator that cooling off is likely, and you need to make an immediate decision. In other cases, the chart may plateau for 1-2 minutes before continuing to rise and then leave the peak. From my experience, profit is the priority—it’s better to secure gains 100% of the time rather than aim for higher profits with more risk. What’s your opinion?