Why liquidations happen and how to avoid them
$310 million was liquidated in the crypto market in the last 60 minutes. Why? Because many traders don’t know how to trade properly. They are influenced by Instagram, TikTok or YouTube traders showing huge profits and think they can do the same thing.
The reality is: those influencers probably know what they are doing. They have the right strategy, entry and exit points. But most traders lack this knowledge and blindly enter hoping to profit. This leads to mistakes and massive liquidations.
Key Lessons to Avoid Liquidations:
1. Take Profits Strategically: If you see TP-1 hit, take profits. Don’t wait for all targets – secure what you can get.
2. Risk Management is Crucial: Don’t over-trade. If you have $100, use only 5-10% of your wallet to get a few signals (2-3 trades). That’s enough to grow safely.
3. Be Patient and Disciplined: Trading is not gambling. It requires patience and discipline. Small, steady profits are better than reckless trades.
Why patience is important:
If you work, you would wait 30 days for your paycheck. So why can’t you wait in trading? If you lose everything today, what would you trade tomorrow? Protect your capital.
Stop Losses vs. Holding Losses:
A major problem is that people hold on to losing trades hoping they will recover, but they close winning trades too early. This is putting the cart before the horse.
If your trades go in the wrong direction, stop losses early – it’s better than letting them expand.
Always use stops to limit your risk.
Trading is not about quick wins; it’s about smart decisions. If you can’t maintain patience, discipline, or proper risk management, trading may not be for you. Stay safe, manage wisely, and keep your future in mind.
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