Account burnout in cryptocurrency trading: Investors' nightmare

Every time I mention “account liquidation,” I feel a flutter of anxiety. It’s not just a number disappearing; it’s the complete collapse of hope. During the recent Tet holiday, while sitting with my family, I realized that many people still do not understand what account liquidation is and why it is so dangerous. Perhaps today is the right time to share.

Existing Trades and Contract Trades – The Decisive Differences

First, we need to distinguish between the two completely different forms of trading. When you have 10,000 yuan and purchase bitcoin worth 10,000 yuan, if bitcoin increases by 10%, you make a profit of 1,000 yuan. If bitcoin decreases by 10%, you incur a loss of 1,000 yuan. This is called existing trading, just like buying stocks in the stock market – you can only lose your initial capital, you cannot face account liquidation.

But contract trading is entirely different. This is where unfortunate events begin to occur.

Leverage – The Double-Edged Sword of Investors

When you open a contract with 9 times leverage, the exchange will loan you 90,000 yuan. This means you are still using only your 10,000 yuan, but you can control 100,000 yuan worth of bitcoin. If bitcoin increases by 10%, you make 10,000 yuan – a profit that is 10 times greater than existing trading.

Sounds great, right? But think for a moment. If bitcoin decreases by 10%, you will lose 10,000 yuan – exactly equal to your entire initial capital. And when your capital goes to 0, the exchange will not wait. They will automatically initiate the liquidation process.

Why would the exchange want to lend you money? Because they bear no risk. When your trading volume increases 10 times, the trading fees you have to pay also increase 10 times. Moreover, when you lose all your capital, they simply need to liquidate the assets and recover the 90,000 yuan they lent – nothing to worry about.

When Liquidation Must Occur: What Is Account Liquidation Really?

This is the most painful part. When your losses reach the point where you have exhausted your actual capital of 10,000 yuan, the exchange will be compelled to liquidate. They will sell off your position, reclaim the 90,000 yuan they lent, and you – you will be left with 0 yuan.

That is account liquidation. It’s not a partial loss. It’s not a temporary hardship. It’s complete, total loss, instantly.

The terrifying part is that it happens so quickly that you don’t have time to react. A piece of bad news about the market, a sudden move, and you have lost everything you have.

Lessons from Those Who Have Experienced It

I have seen too many people drawn into the world of cryptocurrency with hopes of quick gains. They hear about others making big money and think they can too. But they do not understand that success stories are just a small part, while the rest are millions of account liquidation stories that no one wants to tell.

If you are not ready to accept the possibility of losing everything, then never use leverage. If you decide to enter the cryptocurrency market, only use money that you can afford to lose. Because account liquidation is not just a number – it is your own choice, and the consequences will follow you forever.