The risk management strategy consists not only in setting a stop loss, which will prevent the liquidation of your deposit, but also sets a maximum amount of 3-5% of your deposit for opening an order. And it can also be applied to gambling, thus limiting the size of the bet.
Wait, do you mean someone can use as high as 3% to 5% of the equity for a single order? That is outrageous. That means using the upper limits, if something goes wrong, the trader will be burnt out in 20 traders? There is hardly risk management in this. From what I know, the highest exposure you should be willing to do is 1% of your capital. If you have $1k in your trading account, you should never lose more than $10 per trade so that you can remain in business for as long as necessary and when hard luck hits, you will be able to shoulder it and not get liquidated.
Lol, you really don't know crypto traders, I have seen multiple times people doing 100% on a single trade, if they are right then they make money, if they are wrong then they lose it all. These are not professional wall street brokers, they are not aware of what risk management is. The amount of people who trade 10%+ of their entire capital on a single trade is way more than you think.
So at the end of the day, yes, 3-5% is a good advice because it would be drop for 90% of the traders, most of them do a lot more. I started the same way too, because I had very little money, I had 150 bucks at my best time at the start, how am I suppose to do 1% of that, trade 1.5 dollars? That ain't happening, I did all of them, and eventually I made some and lost some but here I am, doing fine. So yeah, 3-5% is a good risk management.
What you have described is a classical example of gambling and not trading. Anyone willing to risk 100% of their capital in a single trade is more or less saying he is willing to lose all the funds if the trade go bad and which is mostly the case for such type of traders because they don't have the mental readiness to manage their capital properly. This class of people does not last long in trading because the market will always find time to deal with them and make them learn the hard way. You will therefore, agree with me that it is bad habit to risk 100% of your capital in a single trade.