Guys, let me tell you about liquidations – a trader’s worst nightmare! Inspired by WhiteBIT’s latest Halloween crypto fear campaign, I decided to offer my insights.
https://whitebit.com/halloween
If you haven't experienced it yet, here's the deal: liquidation happens when the exchange automatically closes your positions because your balance can’t handle keeping them open anymore. It's a way for the exchange to protect itself and the creditors lending you leverage.
In margin and futures trading, liquidations are pretty common. If the market goes the wrong way, your losses pile up, and boom! The exchange closes your trades. This happened to me once – didn't react in time, and my entire position got wiped out. That hurt.
Sometimes, they do partial liquidations – closing just part of your position to balance things out so you don’t lose everything. But full liquidation? Man, that’s painful! When the price keeps dropping, they’ll clear out all your positions, leaving you with nothing.
So, how do you avoid this nightmare? Here are a few things that have worked for me:
Use less leverage. The higher the leverage, the faster you can get liquidated. Keep it conservative, especially in volatile markets.
Monitor your positions. It sounds simple, but it works. Regularly check your trades so you don’t get hit with a surprise liquidation.
Stop-losses. This is your best friend. I always use stop-losses to cap my losses. Set a threshold and let it save you from a full wipeout.
On WhiteBit and Kucoin, setting a stop-loss is super easy. You just pop it into the trading interface, and it’ll close your position automatically if things go south. It really helps protect your funds when the market starts going crazy.
So, if you want to avoid liquidation – always use stop-losses! It’s not hard to set up, and trust me, it’ll save you a lot of stress.
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