Why was my transaction liquidated? If your transaction is now liquidated, it is better not to be upset, but find the flaws in your trading strategy and learn from this. According to the sudden fall of the cryptocurrency market before the Bitcoin halving event, reports show that the volume of liquidated positions during this price drop has reached more than 760 million dollars. Now we will check to find out why my transaction was liquidated. Solving strategy problems always helps to reduce losses in futures trading.
What were the problems of this strategy?
- The problem of leverage, because this position is opened with high leverage, unfortunately it has led to liquidation, because in futures trading, the higher the leverage you consider for the transaction, the higher the risk of the transaction. This trade is opened on the UNI/USDT currency pair with a leverage of 40.
Analytical problem - Analytical problem, although this position has been opened in line with the general trend of the price, but the breakpoints and areas of expansion and contraction of the price have not been taken into account and have not been planned! The analysis of this position in the first stage of the trend is correctly recognized and the trader is sure that the price will fall! But the high leverage here has led to liquidation of the position.
- The problem of guaranteeing the transaction, no guarantee has been considered for this position, and this problem has caused the position to be closed at a loss. There are many ways to guarantee a transaction. When I say guaranteeing the transaction, I mean keeping the position away from liquidation and Approaching profit. In this position, the short trader should not let the position become liquid by any trick. One of the simple ways to guarantee futures transactions is to increase the trading margin, that is, when a position is close to the point of liquidation, you can move away the point of liquidation by injecting assets into the position, although there are other techniques.
- Implementation problem! Unfortunately, this problem occurs in consecutive trades at a certain time, especially when it is opened with high leverage, they become very dangerous. This is what happened in this transaction. There is no need to open and close several positions in a long or short trend with small profits! If this trade was not manipulated by the trader at its initial entry point and remained open, it would now be in profit. It should be noted that this transaction has been liquidated several times on the trend in short-term time frames with profit, unfortunately, in a short position.
As a result, this position has been liquidated for these reasons. Opening with high pyramids and without taking into account the guarantee of the transaction, the execution mistakes go back to the trader himself, who should know himself more!! You should not be in a hurry to make futures transactions, if you trust your analysis and strategy, wait for the price to reach the point of exiting the transaction. Therefore, this position does not have any other benefits for the trader except for learning lessons and gaining experience.
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