Warning for losing all your money! 90% of people have been hit by the five major signs of contract liquidation in 2025!

In the cryptocurrency market, contract trading has attracted much attention for its high leverage and high yields. However, high returns are often accompanied by high risks. Many investors suffered heavy losses in contract trading. This article will discuss in detail the five major signs of contract liquidation in 2025 to help investors better avoid risks in trading.

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Sign 1: The market fluctuates violently

Severe market volatility is the primary sign of contract liquidation. The cryptocurrency market is already full of uncertainty, with frequent and large price fluctuations. When the market fluctuates violently, investors with positions face a sharp increase in risks, especially when high leverage is used.

For example, the price of Bitcoin fell from $50,000 to $40,000 in a short period of time, and this severe price fluctuation can easily lead to contract liquidation. Investors should pay close attention to market trends before trading and set stop loss points reasonably to reduce the risk of liquidation.

Sign 2: Use of leverage too much

Excessive use of leverage is another important sign that contract liquidation is caused. In order to pursue higher returns, many investors choose to use high leverage. However, the higher the leverage, the greater the risk. Once the market moves opposite to expectations, the possibility of a liquidation will increase greatly.

For example, if an investor uses 100 times leverage to trade, the market price needs to fluctuate by only 1% and the investor's position may face a redundant position. Therefore, investors should be cautious when choosing leverage and use leverage reasonably based on their own risk tolerance.

Sign 3: Improper position management

Improper position management is also one of the common reasons for contract liquidation. Many investors lack effective position management strategies when trading, resulting in unreasonable allocation of funds and the risks are concentrated on a few transactions.

For example, an investor invests all his funds in a contract, and once the contract is in liquidation, all funds will be lost. The correct approach is to diversify investment, allocate funds reasonably, and set reasonable stop-profit and stop-loss points to ensure that even if one position is in liquidated, other positions can still maintain profits or losses controllable.

Sign 4: Emotional trading

Emotional trading is another important factor that leads to contract liquidation. Many investors are susceptible to market sentiment during the trading process and make irrational decisions. Fear and greed often cause investors to enter or leave the market at the wrong time, thereby increasing the risk of liquidation.

For example, when the market is panic selling, investors may choose to stop loss and leave the market because of fear, and end up missing the subsequent rebound opportunity. On the contrary, when the market is in a bull market, investors may ignore risks due to greed, resulting in excessive positions and eventually breaking their positions. Therefore, investors should remain rational when trading and avoid emotional decisions.

Symptom Five: Lack of risk management

Lack of risk management is the last important sign of contract liquidation. Many investors do not develop effective risk management strategies when entering the contract trading market, which leads to off-guard when facing market fluctuations.

Effective risk management includes setting stop loss points, rational use of leverage, diversification of investment and other measures. Investors should formulate detailed risk management plans before trading and strictly implement them to ensure that losses can be stopped in time when there are adverse changes in the market and reduce losses.

FAQ

Q1: How to judge whether the market is in a period of severe volatility?

A1: To determine whether the market is in a period of severe fluctuations, you can observe it through the following aspects:

• Price fluctuation range : Observe the recent price fluctuation range. If the price fluctuates significantly in a short period of time, it may indicate that the market is in a period of severe fluctuation.
• Changes in trading volume : A sudden increase or decrease in trading volume may also indicate changes in market sentiment, resulting in price fluctuations.
• Market sentiment indicators : Some market sentiment indicators, such as the fear and greed index, can help investors understand market sentiment and judge whether the market is in a period of severe volatility.

Q2: What risk management measures can be taken when using high leverage trading?

A2: When using high leverage trading, the following risk management measures can be taken:

• Set a stop loss point : Before entering the trading, set a reasonable stop loss point to prevent adverse market changes from causing a position explosion.
• Diversified investment : Spread funds into multiple different contracts to avoid concentrating all funds on one transaction.
• Reduce the leverage multiple : According to your own risk tolerance, appropriately reduce the leverage multiple and reduce the risk of liquidation.
• Regular evaluation : Regularly evaluate your trading strategies and positions, make timely adjustments, and ensure that risks are controllable.

Q3: How to avoid emotional trading?

A3: To avoid emotional trading, the following measures can be taken:

• Formulate a trading plan : Develop a detailed trading plan before trading, including entry points, exit points, stop-profit and stop-loss points, etc., strictly follow the plan to avoid being affected by market sentiment.
• Stay rational : Stay calm and rational in the trading process and avoid making irrational decisions due to fear or greed.
• Use automated trading tools : Using automated trading tools can help investors reduce the impact of emotional trading and ensure the execution of trading strategies.

Q4: What are the effective risk management strategies?

A4: An effective risk management strategy includes the following aspects:

• Set Stop Loss Point : Set a reasonable stop loss point in each transaction to control the losses of a single transaction.
• Use leverage reasonably : Choose leverage multiple reasonably based on your own risk tolerance to avoid excessive use of leverage.
• Diversified investment : Spread funds into multiple different assets or contracts, reducing the risk of a single asset or contract.
• Regular evaluation and adjustment : Regularly evaluate your trading strategies and positions, adjust in a timely manner according to market changes, and ensure that risks are controllable.

The above is the detailed content of Warning for losing all your money! 90% of people have been hit by the five major signs of contract liquidation in 2025!. For more information, please follow other related articles on the PHP Chinese website!