Leverage does not die, positions are the culprit. Liquidation is not fate, it is caused by human error.
Looking at the record of my account once again losing everything, my fingers tremble involuntarily. Last night, Bitcoin once again 'flash crashed', dropping below $87,000, with a daily decline of over 5%. And my position has once again vanished into thin air.
This is the seventh time I've faced liquidation in my three-year trading career. My friends jokingly call me the 'liquidation specialist' until I realized the truth that silenced them: liquidation has never been a market issue, but rather our own choice.
Today, I want to share with you the lessons I've learned over the years, bought with real money, without any reservations.
Leverage does not kill; positions are the true culprit
I remember in February 2024, when Bitcoin surged to $57,000, a frenzied speculative atmosphere pervaded the market. At that time, I naively thought that the higher the leverage, the faster the profit. The result? Within 24 hours, over 60,000 accounts were liquidated, with liquidation amounts reaching 2.5 billion RMB.
Du Tongtong, a researcher at the Federal Securities Research Institute, pointed out the key: leverage will proportionally amplify losses. Under 10 times leverage, a 10% reverse price fluctuation can lead to a total loss of margin.
The harsh comparison:
100 times leverage + 1% position = actual risk ≈ 1% on spot
100 times leverage + full position = direct suicide
A friend of mine in the circle strictly adheres to the 20 times leverage + 2% position ironclad rule, navigating through multiple bull and bear markets while maintaining a zero liquidation record for three years. However, during each sharp market fluctuation, the 'needle insertion' phenomenon may instantly breach the forced liquidation line, causing investors to be unable to react in time and face liquidation.
Stop loss is not admitting defeat; it is a strategic retreat
On October 11, 2025, the crypto circle encountered a 'black swan', with the total contract liquidation amount exceeding $19 billion in a single day, involving as many as 1.64 million liquidated accounts. That night, I watched helplessly as my positions were gradually swallowed, yet due to the lucky mindset of 'maybe it will go up again', I did not stop loss in time.
The result is predictable.
Looking back at past crashes, nearly 80% of liquidation accounts collapsed due to the same issue: losses exceeding 5% but still holding on. The survival rule is simple: let single losses never exceed 2% of your principal. This is not a strategy; it is your account's 'high-voltage protective net'.
Position management: your lifeline
Now let's get to the point. How did I go from being a 'liquidation specialist' to achieving stable profits for 15 consecutive months.
Dynamic position formula:
Total position ≤ (Principal × 2%) / (Stop loss margin × Leverage multiple)
For example: if you have $10,000 in principal, set a stop loss margin of 5%, and use 10 times leverage, then your total position should not exceed (10000 × 2%) / (5% × 10) = $4000.
Calculating according to this formula, say goodbye to 'feeling position'.
The art of stop loss: leave yourself a way out
In November 2025, Bitcoin collapsed again, with over 438,000 people liquidated in the global cryptocurrency market. Yet, I emerged unscathed.
Why? Because I strictly implemented the three-stage profit-taking method:
Profit 20%, close 1/3, recover principal
Profit 50%, then close 1/3, locking in most profits
Remaining position, set a trailing stop (e.g., exit all if breaking the 5-day line), to capture larger trends
In the previous halving event, this strategy transformed my $50,000 principal during two key trends.
When a black swan arrives, how should you respond?
'The King of Crypto' once warned that the crash in October 2025 may just be the prelude to a 'black swan' event. Market manipulation risks also need special attention, as due to the relatively dispersed funding of crypto assets, the market is easily influenced by large funds.
My response strategy is: hedging insurance mechanism.
When holding positions, use 1% of total funds to buy Put options. This small amount can protect most of your net worth in extreme market conditions. Tests show it can hedge over 80% of sudden risks.
The essence of trading: a mathematical game
The essence of profit is nothing but this formula:
(Win rate × Average profit) - (Loss rate × Average loss) > 0
When you strictly set the stop loss at 2% and the profit target at 20%, you don't even need a high win rate (only 34%) to achieve long-term stable profits.
Let the data speak:
Holding positions for more than 4 hours increases the probability of liquidation to 92%
Average monthly operations exceed 500 times; transaction fees alone erode 24% of your principal
83% of profitable accounts eventually give back all profits due to greed and failure to take profits in time
My ultimate survival rule
After three years of ups and downs, I have summarized the following ironclad rules:
Single losses must never exceed 2%
Annual operations must not exceed 20 times
Win-loss ratio, strictly locked at above 3:1
70% of the time, stay patiently out of the market
Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, also reminded investors to set stop losses, control positions, and diversify when investing in cryptocurrencies. This aligns with my philosophy.
I remember a senior trader once told me: 'A good swimmer drowns in water.' Many great merchants throughout history are adept at using leverage, but often fall due to it.
Today, I still face the market's ups and downs every day. But the difference is that I am no longer afraid because I have a complete survival system.
If you are still struggling in the cycle of liquidation, take a moment to stop and reassess your trading system. Liquidation is not bad luck; it is the result of your active choices. Only by facing this can you truly break free from this cycle.
Remember, in this market, surviving longer is more important than making quick profits. Follow Ake to learn more first-hand information and precise points about the crypto circle, becoming your navigation in the crypto world; learning is your greatest wealth!#巨鲸动向 #加密市场观察 $ETH
