Are you a crypto trader in 2022? Then you probably lost a lot of money. More than $200 billion has been wiped out of the cryptocurrency market in a short period of time and many traders have faced liquidation and huge losses. If you survived the massive market crash, congratulations! You’re one of the lucky ones.
Happiness doesn’t last forever, of course. Whether you’re a novice or a veteran, learn from the experts how to avoid liquidation or recover your losses afterwards. This article can help you get out of the shadow of liquidation and become one of the few winners in the crypto carnage to have the last laugh.
How do you avoid liquidation?
1. Plan your trades
The best way to minimize your liquidation risk is to plan your trades well before opening them. Having a strategy and a calculated approach reduces your chances of unnecessary losses. A trading simulator is good for practicing your trading plan and testing your strategies to improve accuracy.
2. Keep an eye on the margin ratio
Another way to avoid liquidation is to keep an eye on the margin ratio. It involves making sure that the margin does not reach 100%. When it gets close to 100%, keep the position alive by adding more of it. This allows you to trade for a long time without risking liquidation.
No time? Too tired? Then you can try copy trading. It’s perfect if you’re too busy to check the margin ratio and every market move. Meanwhile, you can increase your profitability by learning the best strategy from superior traders.
3. Take advantage of the leverage function
Some articles suggest that it is good to lower leverage when trading. And yes, they’re right: low leverage is the key to lowering risk. However, you will have to invest more because of the low leverage that will increase your costs and lower your profits.
It’s a double-edged sword. High leverage can increase risk; However, you will not only take fewer losses, but also reduce the chance of liquidation through profitability, as long as you set the stop loss in a timely manner. Savvy traders know that leverage is the same as putting in a coin and the platform lending you a sum of money, so why not use that money to smooth out market volatility?
How to recover from liquidation?
1. Change your strategy
Afraid of the stock market crash? Don’t want any risks? Maybe it’s time to change your strategy. Choose a conservative strategy, such as putting your money in a wallet with high interest rates and slowly recovering from liquidation to turn your losses into profits. An annual interest wallet is similar to a beginner’s village, allowing you to live a peaceful life and benefit in the long run if the market fluctuates. Just don’t start trading again until the market turns bullish again.
2. Expand your possibilities with handy tools
To be able to trade again if the market turns bullish you need a sum of money, oh no, your money was lost in the last liquidation! What do you have to do then?
You can choose a platform with welcome bonuses, where you can get a preferential bonus when you deposit money into your account. Some even offer you a big reward as a new user. You can use this money to increase your principal, and more principal means more error tolerance, lower risk of liquidation and more profit.
3. Choose an exchange you can trust
You know why liquidation is terrible: many exchanges forcibly close positions at a balance loss of ≥50% (so-called liquidation). The balance after liquidation is settled which is extremely unfriendly for users who are liquidated. So you should choose an exchange that would not deduct the users’ balance, such as Bexplus.
Bexplus will not deduct the user balance after liquidation. It closed positions when the balance lost ≥70%, giving users more options for fault tolerance. If the user’s balance falls to a negative value, Bexplus will bear the loss. Its easy-to-use mechanism makes users feel safe and protects users’ profits.
The user-centric crypto exchange Bexplus
Bexplus is a leading crypto derivatives trading platform that offers 100x leverage futures trading on a variety of trading pairs: BTC, ETH, ADA, DOGE, XRP, and more. In addition, it has the following features:
Up to $5,000 in Rewards to welcome every new user.
