Why is "no stop loss" + "heavy position" the "deadly combination" for getting liquidated?

1. Heavy Position (Over-leveraged)
· Function: It amplifies your losses. For example, if you use 10x leverage and the market moves against you by 1%, your principal will lose 10%. If you use 100x leverage, a 1% move against you is enough to Get Liquidated.
· Psychology: Behind a Heavy Position often lies the gambler's mentality of "getting rich overnight," trying to obtain the maximum profit with the smallest principal. However, even a slight unfavorable market condition can bring enormous psychological pressure and capital drawdown.
2. No stop loss (letting losses run)
· Function: It removes your last line of defense for risk control. When the market moves against your judgment, having no stop loss means your losses can expand indefinitely until you Get Liquidated or are forced to close your position when you can no longer bear it.
· Psychology: The lack of stop loss is usually behind the "gambling mentality" and "loss aversion." Thoughts like "Wait a bit longer, maybe it will come back up" and "I've already lost so much, selling now would be too painful" can lead a person step by step into the abyss.

When these two factors combine, a deadly cycle is formed:
Heavy Position → Market experiences slight reverse fluctuations → Account shows huge floating losses → Refusal to stop loss due to excessive losses (hoping to break even) → Market continues to reverse → Losses reach the platform's liquidation line → Get Liquidated.

Real Cases and Scenarios

Yesterday (and every day in the past), such stories have been repeated in the global foreign exchange, cryptocurrency, and futures markets:

· Cryptocurrency Market: If yesterday a mainstream coin (such as Bitcoin, Ethereum) experienced a rapid decline of over 5%, those who had Heavy Positions and used high leverage in contract trading would be largely Get Liquidated. Blockchain data platforms often show a large number of leveraged positions being liquidated within a certain price range.
· Forex Market: When important economic data (such as non-farm data, CPI) is released, the market will experience significant volatility. If traders take a Heavy Position betting on one direction and do not set a stop loss, after the data is released, the market will move against them and "sweep losses", which effectively targets those accounts without stop losses, directly leading to Get Liquidated.
· A-share market: Although A-shares do not have leveraged Get Liquidated (unless it is margin trading), investors who have a Heavy Position in a single stock and "stubbornly hold without stop loss" essentially experience a "slow Get Liquidated," meaning they are deeply trapped, with their principal significantly shrunk, equivalent to a Get Liquidated in terms of time dimension.

Advice for Traders

You raised this question, whether out of curiosity or self-reflection, it is worth reiterating these golden rules of the trading world:

1. Always set a stop loss: Set the stop loss order at the same time as placing the order, treating it as part of the trading cost, which is a necessary "insurance premium."
2. Light Positioning: Especially in the early stages, it is best to control the loss of a single trade within 1%-2% of the total capital. Staying alive is more important than making quick money.
3. Manage your position well: Do not invest all your funds into a single asset or direction.
4. Respect the Market: The market is always right, do not try to fight against it. Acknowledging mistakes and quickly implementing stop loss are essential qualities of a professional trader.

Conclusion: Although we cannot know how many people specifically got liquidated yesterday, it is certain that the vast majority of them made the two fatal mistakes of "not stop loss" and "heavy position". In the world of trading, survival is the top priority, and risk control (stop loss and position management) is the only shield that allows you to survive in this market.