How to Avoid Liquidation in Crypto Futures
Liquidation is the single event that ends most futures accounts. It is not bad luck, it is almost always the predictable result of a few avoidable mistakes. Here is what actually triggers it and how to keep your positions alive.
What liquidation really is
When you trade with leverage, the exchange sets a liquidation price: the level at which your losses would eat through your margin. Hit it, and the position is force-closed and your margin is gone. The higher your leverage, the closer that price sits to your entry, so at 50x a 2% move against you is enough to wipe the position.
The rules that keep you alive
Most liquidations disappear if you follow these:
- •Use low leverage. At 3x to 5x, the market has to move a lot before you are in danger
- •Set a stop-loss on every trade, before you enter, not after
- •Risk only a small slice of your balance per trade, so one loss is survivable
- •Watch your liquidation price, not just your entry, and give it room
- •Do not add margin to a losing trade hoping it turns, that is how small losses become total ones
The mindset that matters
Liquidation is usually a leverage problem, not a market problem. Traders who last are the ones who size positions so no single trade can end them. Treat any welcome bonus as a cushion, never as a reason to size up, and never trade money you cannot afford to lose.
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