Liquidation Cycle: Why Does Leverage Always Stand Opposed to Retail Investors?
Leverage is not meant to help you make money.
Leverage is meant to make you lose a bit faster, more accurately, and without regrets.
The underlying structure of liquidation is only two words:
Volatility.
And retail investors never understand:
Your position is not taken out by direction,
but by volatility.
Professional traders always first ask:
What is the current volatility?
Is the current depth enough to support the position?
What is the distance between the current liquidation price and the structural point?
And retail investors always ask:
"Can I make a profit?"
"Is the direction correct?"
"Will it reverse?"
The coldest aspect of the leveraged market is:
Even if the direction is right, you can still be liquidated.
If the direction is wrong, it's even worse.
As long as volatility breaches the liquidation line,
You don’t even have the qualification to appeal.
Liquidation is not bad luck,
Liquidation is an inevitability:
Excessive leverage + Incorrect position structure + Not understanding volatility cycles.
You think you're betting on direction,
In reality, you're betting on "whether volatility will just hit your liquidation point."
And how do the main players operate the market?
Simply:
Wherever the volatility can most trigger your liquidation, that's where they will strike.
Liquidation is actually a form of "intelligent design."
You never lose to the market.
You lose to the people who design the leverage.
Follow me, come to the chat room, and I'll help you systematically trade
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