🚨Liquidation vs. Stop Loss: Protecting Your Capital in Crypto Trading🚨
(Support us vote for me go to my profile and vote 🙏)
After trading for over four years, one of the most crucial lessons I’ve learned is the importance of protecting your capital.
🔴1. 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." . It’s the last thing any trader wants to experience.
🔴Key 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.
Don’t Follow Random Signals: Relying on external signals without thorough research can lead to poor decisions.
Quote: “When you liquidate, you’re not just losing capital, you’re losing your opportunity to trade again.”
🔴2. 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.
🔴Advantages of Using a Stop Loss:
Control Over Your Trades: A stop loss lets you decide how much risk you’re 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: “Trading without a stop loss is like driving without brakes—you’re bound to crash.”
#BTC☀ #Write2Earn! #BinanceTurns7 #BinanceLaunchpoolTON #LowestCPI2021