Why Liquidations Happen in Crypto Trading and How to Avoid Them 🔔
In the last 60 minutes alone, the cryptocurrency market saw a staggering $310 million in liquidations. So, why does this happen? The answer is simple: many traders don’t fully understand how to trade properly. They often fall victim to flashy Instagram, TikTok, and YouTube traders showing off their big profits, thinking they can replicate the same success with little experience or knowledge.
But here’s the reality: while those influencers might know what they’re doing, using the right strategy, entry points, and exit points, most traders aren’t equipped with the same knowledge. Instead, they jump into trades blindly, hoping for a quick profit. Unfortunately, this leads to poor decision-making and, ultimately, huge liquidations.
Key Lessons to Avoid Liquidation
If you want to trade successfully and avoid becoming part of the liquidation statistics, here are a few crucial lessons to follow:
1. Take Profits Strategically
It’s tempting to wait for the price to reach your final target, but trading isn’t about greed. If your first profit target (TP-1) is hit, consider taking some profit off the table. Locking in gains early is a smart move rather than hoping for more. Remember, profits are profits—secure them when you can.
2. Risk Management is Key
Many traders go overboard and risk too much on a single trade, hoping for massive gains. But this is a quick way to lose everything. Instead, use only 5-10% of your trading capital on each trade. For example, if you have $100 to trade, aim for just 2-3 trades per day. This is enough to grow your account slowly and steadily, without risking everything on a single high-stakes bet.
3. Be Patient and Disciplined
Trading is not a get-rich-quick endeavor. It requires patience and discipline. Quick profits might seem tempting, but they’re not sustainable. Small, steady gains are far more reliable than risky trades hoping for a big payoff. The key is consistency.
Why Patience Matters in Trading
In most jobs, people wait 30 days for a paycheck. So, why can’t traders exercise the same level of patience? If you lose all your capital in one trade, how will you trade tomorrow? Protect your funds and think long-term.
Just like in traditional work, patience is crucial in trading. Don’t rush; let the market come to you.
Stop Loss vs. Holding Losses
One of the most common mistakes traders make is holding onto losing trades, hoping they’ll recover. But when they see profits, they often close those trades too soon. This approach is entirely backward.
If your trade moves against you, don’t let it develop into a larger loss. Cut your losses early, while they’re still small, and move on. The goal is to preserve your capital for the next opportunity.
And always use stop-loss orders to limit your risk. A stop-loss is a tool that automatically closes your trade at a predetermined price, preventing emotional decision-making that could worsen a losing trade.
Final Thoughts
Trading is not about making quick, huge wins; it’s about making smart, calculated decisions. To be a successful trader, you need to master patience, discipline, and risk management. If you can’t manage these three factors, trading might not be the right path for you. Stay safe, trade wisely, and always keep the long-term in mind.
By managing your risk and avoiding impulsive decisions, you’ll ensure that you’re in it for the long haul, not just chasing after short-lived wins. $BTC $XRP $BNB #MarketPullback #USJoblessClaimsFall #USUALBullRun #USUALTradingOpen #ElSalvadorBTCReserve