Liquidation is something I fear the most in my trading history, because no matter how sure you are about a trade, the market can decide to go otherwise. If you've only set a take-profit (TP) without setting a stop-loss (SL), you'll surely face liquidation at the end of the day.
A seasoned trader once said it's better to hit your SL than to liquidate, because you'll have something to fall back on to recover your losses.
A word of caution is enough for the wise. I'm sharing this because of a close friend who saw me trading a few days ago and thought it was easy after watching some YouTube videos. He bought XRP futures and lost up to $1,000. Ironically, he later came to confess to me, which was already too late, as his overconfidence had led him to neglect setting an SL. I helped him fight for liquidation protection, and he managed to get $100 back
here due to his larger trading volumes.
Now, he's back to learn from me. What advice should I give him?
I assume this is about futures trading, right? If you want to manage your risks, then it is best to use stop loss. If you just put a long position with just take profit and do nothing to prevent any catastrophic losses, then you are not trading. All you are doing that is gambling with the hope that the price will never fall below a specific amount and that it will keep on rising. But this is not true. Any unexpected fluctuation in the market can cause the price to dip significantly for few seconds and this dip will cause you to get liquidated and this is what happens most of the time. Its best to have something left than nothing at all. You invest $100k and you are losing money. At that moment being able to save even $10k would feel less depressing.