Judging by the title of the post, I bet you think I'm going to write about how many people just got liquidated by the Friday crash. Well, I'm not. This post is more than that.
It's been a few days since the biggest flush in the crypto history has happened. I've waited a few days to see the reactions, or better yet, for my suspicions to be confirmed, but now it's time for me to put my thoughts on paper.
Indeed, so many got really hurt and when I say hurt, I'm not talking about losing $15, which some people from some countries consider a fortune, but about tens of thousands, even millions. Today however I'm not going to talk about those who lost millions, but about the small ones, for a good reason.
Before I go on, I'm not here to gloat or mock anyone. I feel sorry for every lost penny (even though it's part of the game), regardless who's pockets have been affected and I know people who took their lives after a crash like this. My purpose with this post is to (maybe) open their eyes and try to show them another way of doing things. Too bad those who could learn from it are not going to read it, but that's life, I'm ok with it.
As I said, I waited for a few days to see the reaction, especially on Hive and as expected, what I saw in posts was them showing off with big numbers referring to the magnitude of liquidation. This is pretty common as they think it hits hard. Then again what we usually see here, blame thrown at whoever they can, Trump, insiders, you name it. Most likely the reason behind these posts, besides getting some Hive is the hope to look smart. Dunno.
I saw a few people posting about them getting liquidated. Getting an email from the exchange notifying you about being liquidated is brutal. This is when you see them saying who the hell thought the market is going to drop? Or the market has not been kind to me.
Well, I have news for you. The market is not here to be kind to you. The market is a place where supply and demand meet and despite how it looks, not everyone loses. There are people who win and there are those who don't win, but don't lose either.
Who knew? This is, was, has been the question after every crash. No one honestly, or only a few people (those who shorted $BTC heavily and made millions), this is why we have risk management. If you really are a trader, you know there's a level where you're wrong and that's where you get out of the trade to protect your capital. That is called stop loss. If price dips below that level, or goes above it if you're shorting, your idea is invalidated and you get out with losing only a small percent of your capital.
Every exchange has a liquidation level calculator. When you enter a trade, you already know what your liquidation level is and your stop should be way above that level. Not knowing where your liquidation level is, or not using a stop, is not the market's fault. Blaming everyone is also not going to save you.
The sad thing is, you never see them asking questions like, what did I do wrong, where did my TA go wrong, why was my position, or account liquidated?
The saying walking the same path and expecting different outcome is considered a cliche, yet so many do exactly that. The industry calls them gambling but the truth is, they are even worse because the gambler has 50/50 chance to win, but throwing money into leveraged positions without knowing what you're doing can only result in losses.
Smarter people than us have invented journaling and today you have some platforms offering amazing journaling services and provide amazing analysis on the data you import from your exchange. Using these services is not going to save you from losses, but can point out your weaknesses if done right.
Those who are really determined to make trading work and get profitable usually get themselves together, start studying, backtesting and apply risk management. Others are just blaming the market, market makers, insiders, scam projects, you name it. This is life and there's nothing you can do. They are going to disappear from the market as at some point they are going to get fed up with losing everything, then others are going to join and do the same thing. Life goes on.
If you're a newbie, you may want to check out these guides:
