đšLiquidation vs. Stop Loss: Protecting Your Capital in Crypto Tradingđš
(Support us vote for me go to my profile and vote đ)
After trading for over four years, one of the most crucial lessons Iâve learned is the importance of protecting your capital.
đŽ1. Liquidation: The End of the Line
Liquidation occurs when your trade loses so much value that your margin can no longer cover the losses. At this point, the exchange automatically closes your position, essentially saying, "Game over." . Itâs the last thing any trader wants to experience.
đŽKey Tips to Avoid Liquidation:
Avoid High Leverage: Using high leverage can amplify your losses, bringing liquidation closer. Keep your leverage low to manage risk better.
Limit Your Margin Usage: Never risk more than 5% of your margin on a single trade. This conservative approach helps protect your capital.
Limit the Number of Open Trades: Stick to a maximum of 3 open trades at a time to avoid overexposing your portfolio.
Donât Follow Random Signals: Relying on external signals without thorough research can lead to poor decisions.
Quote: âWhen you liquidate, youâre not just losing capital, youâre losing your opportunity to trade again.â
đŽ2. Stop Loss: Your Safety Net
A stop loss is a pre-set price level that automatically closes your trade when the market moves against you. Unlike liquidation, which is forced by the market, a stop loss is a tool you control.
đŽAdvantages of Using a Stop Loss:
Control Over Your Trades: A stop loss lets you decide how much risk youâre willing to take, giving you control over your trading decisions.
Prevents Panic: By setting a stop loss, you avoid making impulsive decisions based on market volatility.
The primary goal of a stop loss is to protect your capital from major losses, keeping you in the game for future opportunities.
Quote: âTrading without a stop loss is like driving without brakesâyouâre bound to crash.â
#BTCâ #Write2Earn! #BinanceTurns7 #BinanceLaunchpoolTON #LowestCPI2021
