Why Liquidations Happen and How to Avoid Them

In the past hour, over $310 million was liquidated in the cryptocurrency market. This often happens because many traders jump in without proper knowledge, influenced by social media influencers flaunting massive gains.

Here’s why liquidations occur and how you can avoid them:

Why Liquidations Happen

1. Blindly Following Influencers: Influencers might share their successes but often omit the risks and strategies behind them. Beginners, inspired by their results, trade impulsively without proper planning.

2. Lack of Strategy: Most traders don’t understand entry and exit points, risk management, or market trends, leading to poorly executed trades.

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Key Lessons to Avoid Liquidations

1. Take Profits Strategically:

When a target is hit (e.g., TP-1), secure a portion of your profit instead of waiting for all targets to hit.

This reduces risk and ensures you walk away with gains.

2. Master Risk Management:

Only use 5-10% of your trading wallet per signal or trade.

Avoid over-trading. Fewer, carefully chosen trades can lead to more sustainable growth.

3. Be Patient and Disciplined:

Trading is not gambling—it’s a process of calculated decision-making.

Small, consistent profits are better than chasing high-risk, high-reward trades.

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Why Patience Matters

Think of it like earning a paycheck—you wait 30 days for your salary, so why rush in trading? Protect your capital. Without it, you won’t have funds to trade tomorrow.

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Stop Loss vs. Holding Losses

The Problem: Many traders hold onto losing trades, hoping for recovery, while closing profitable ones too early.

The Solution:

Use stop-losses to limit your risk and cut small losses before they grow.

Let profitable trades run within your risk tolerance.

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Final Thoughts:

Trading is about smart decisions, not quick wins. If you struggle with patience, discipline, or risk management, reconsider your approach. Stay safe, trade wisely, and prioritize your future over short-term gains.

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