The cryptocurrency market can be very volatile and liquidations are a common occurrence. For example, $310 million was liquidated in just 60 minutes recently. Why does this happen? A big reason is that many traders lack the knowledge and skills needed to trade successfully. Influenced by Instagram, TikTok or YouTube traders showing off huge profits, they often believe that they can copy those results without understanding the risks involved.

Here’s the harsh truth: many influential people have solid strategies, know when to enter and exit trades, and are experienced in risk management. On the other hand, inexperienced traders rush in blindly, driven by emotion or greed, leading to costly mistakes and widespread liquidations.

How to Avoid Liquidation: Key Lessons

  1. Take Profit Strategically
    Don’t get too greedy. If your trade hits the first take profit level (TP-1), lock in some profits instead of waiting for all targets to be reached. Partial profit locking reduces risk and ensures you don’t go home empty-handed if the market reverses.

  2. Practice risk management
    This is the foundation of successful trading. Allocate only 5-10% of your capital to each trade. For example, if you have $100 in your account, trade only $5-10. Over-leveraging or trading with your entire portfolio increases the risk of losing everything in one bad trade.

  3. Patience and discipline
    Trading is not a get-rich-quick scheme; it is a skill that requires patience and consistency. Chasing big wins with reckless trades is gambling, not investing. Aim for small, consistent profits over time.

Why Patience is Important

Think about your job—you have to wait 30 days to get paid. Likewise, in trading, waiting for the right opportunities is essential. Losing everything in one day leaves you with no capital to trade tomorrow. Protect your money and trade with a long-term perspective.

The Stop Loss Dilemma

One of the biggest mistakes traders make is holding on to losing trades, hoping for a reversal, while closing profitable trades prematurely out of fear. This mindset is counterproductive.

  • Cut Losses Early : Use stop loss orders to limit losses. Accept small losses when a trade goes wrong instead of letting them grow into significant losses.

  • To increase profits: When your trade is profitable, adjust your strategy to maximize profits instead of exiting too early.

Final thoughts

Cryptocurrency trading is not about making quick money. It is about making smart, calculated decisions. Without patience, discipline, and proper risk management, you will likely fail in this market. If you find it difficult to follow these principles, trading may not be the right path for you.

Stay informed, trade responsibly and always prioritize protecting your capital. Trading success comes from continuous learning and a disciplined approach, not from taking shortcuts.

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