Topic: Having reserved fund in funding wallet best way to protect your trading position (Read 265 times)

There is no point in waiting for your position to be liquidated by the exchange. Isn't it a simple solution to set a stop loss to reduce further losses? And after the stop loss is triggered, wait for a more acceptable entry point and open a position again.

Diversify as much as you can but there would really be traders who do really focuses only on 2-3 coins at a time and dividing their overall trading capital on this way. Market is volatile and doesnt matter on how you would really be able to make yourself on doing trades whether going on few coins or single ones or will really be dividing into different coins because you do have that plans on trying out to divide up the risks.

Reserved funding on backing up on your losing position is something that not ideal but if this one talks about spot positions then it will really be that not an issue but if this ones talks about futures then this would really
be just that depending on you whether you will really be making up some buyback position whenever your liquidation hits. So this will really be just that basing up into your risks management since not all will
really be that good on trying out to balance things accordingly but rather they will be that become impulsive on the moment it do happens.

One of the things i do hate up when dealing up with futures is on that once that liquidation hits then there's no way about recovery.

I would go as far as to take only 10% for a position to go, of course - you do a great job diversifying the risks and not putting everything in one punch.
The market doesn't like the moves like that..

To support your statement, no matter how bad your stop lose levels  is set, it is still better than traders that don't set stop lose at all even if they are with the systems! Stop lose settings in derivatives trade protect the capital and help the trader to have funds for recovering after loses. In fact some professionals traders see it as a bad trading habit if a trade does not set a stop lose during trading.  Since we cannot predict the assets price direction accurately,  its important we protect our capital from complete liquidation during volatile periods.

If I have to trade, then I will not use 100% of my budget in one order. I will at least split 2 parts before placing an order, this is part of the initial protection against being completely liquidated when the price drops. Sometimes I even have 2 orders where the second order is opened at a price close to the liquidation of the first order, of course with lower leverage than the first order.

Has anyone taken the same approach as me too?
I think this approach is the best way to completely avoid losses due to liquidation.

Pretty sure that other traders been doing it but not for me, im not really that trying out to catch a falling knife. I wont really be trying out to chase it out and just let it to be liquidated but its  really that ideal that on the moment that it do happens then try out to look for that possible entry for such reversal. This is why it is really that relevant or something that important that you do have that extra USDT into your trading account on which you could really be able to make out positions on trying to catch some pullbacks or recovery on which you could be able to recover out those loses that you had incur with that sudden decline or pump basing up whether you do have that buy or sell position. It will really be that up to you on how you do deal up with things accordingly whether you do make out some entry on that liquidation point or waiting up for the possible bottom?

Nobody want to maximize loss, they want to minimize their losses and avoid losses at all cost if possible. No offend as I believe you typed it inaccurately in your post, minimize our losses is what you wanted to say.

The best way to reserve fund to use, is store your bitcoin in non custodial wallets, not on exchanges. Because if you send your bitcoin to exchange accounts, you will surely use it for trading no matter you store in in Funding or Spot account. It's very easy to move your fund on exchanges from Funding to Spot account, choose it and click to move your fund, so you are challenging your ability to control your fund and most traders fail to control themselves.

The best practice is holding in non custodial wallet and only deposit a trading capital for trading, afford to lose it, and don't try to deposit more to rescue your currently in loss trading position.

What you said is quite okay for me, because somehow we can maximize our losses and if it becomes profitable, we can put more funds in our funding wallet,
that's the only good system to do. If we want to accumulate savings in the future.

You said this very well and I totally agree and other holders should do the same in the crypto space we live in.

I think it is both. He might be a full-time trader to have a confidence of monitoring his trading activities but there might be occasions that he will go out for a while and he can get delayed to go back at home to check his trading activities. There is phone and smart watches that can also be used to trade but what if those are also unavailable that time? I think it's always better to be safe than sorry.

There might be no harm anyway, if we have set a stop loss. The fuck up you are telling there about the exchange, is I think another story anymore and no stop loss can save us when that moment occurs. A bugged stop loss can be a problem of the platform, so they might still refund us if that event makes us lose.

Yes there are few traders that actually do not use stop loss with the intention that the market will bounce back and go with their favor but I tell you it is a very bad strategy one cannot watch the market all the time, I have once heard someone that they watch the market and close the trade manually by themselves and I said the market can move in high volatile trend for a short period of time I can recall the sharp fall of bitcoin price to $48k some time again and how many people got liquidated.

For me stop loss should be your ally in this trading world, if a stop loss is lower than your liquidation price then that trade to me is definitely not a good trade to enter

Many people have mentioned to use stop loss, which is correct, but the reality many people have a love hate relationship with stop loss and choose to not use it. There will be a moment where your stop loss executed but after few hours the price bounce back which mean you should be in profit. But there will be a moment the coin price went down really low, if you've set up stop loss, at least you still have some instead of lost it all.

Sometimes it’s better not to use your reserve funds to cover up and to avoid liquidation. One thing with trading is that if you’ve placed your stop loss or risk the amount you’re capable of risking even though your account will be liquidated before getting to that price, it is better the market liquidate you and then look for another good position to enter the market again with your reserved funds and start a new trade. Trying to run away from liquidation may cause you to lose more if the market still did not follow your prediction of its direction. So it is better to allow the market sometimes to liquidate the one you can risk that time and look for a new position to enter a new trade.

Traders who are very confident about themselves from trading knowledge to practice, are most vulnerable to losses.

Market can have wild times and exchange orders can have issues, sometimes cascade effects appear and kill your positions especially leveraged positions with liquidations.

Stop loss order is good but a better one is Stop limit order that can be more efficient to avoid order failure to be triggered and filled.

One of best weapons in trading.
What is a Stop-Limit Order?
Difference between Stop-Loss and Stop-Limit orders.

Are you sure this is not a sign of overconfidence in yourself? Regardless of how well you analyze the market, there can be fuck ups from the exchange itself. I know their stop-loss feature can be bugged too, but at least you'll have some leverage if they claim your order is not executed because you don't use the stop-loss feature or something similar. Not to mention the market can swing unexpectedly, even if you only trade Bitcoin/fiat pair with the highest volume. I think it's risky because there are dozens of horror stories out there from traders who don't use stop-loss. I don't think the number of traders who use stop-loss is that small either. I believe there's a reason why it's almost mandatory for exchanges to have this.

Stop-loss feature will indeed save your day especially if the coin you are trading with is not in better position. Extra fund may help but you need to assess the trading market before you put the money for trading purposes. Check the performance of coin itself and should pause first before pushing yourself again to execute a trade.
Reserve funds should only be use if there is really significant position that you believe you can profit from. But if there's no high chance of earning from it, better halt and just let it go.

You automatically do this by using cross-margin account and not using your entire balance for your margin.

the position will only liquidate you when your cross-margin account can't mantain the margin anymore due to lack of funds.

though I personally never liked this kind of thing, too risky, one mistake and account blown away, especially in rally like this if we open short position. I just prefer isolated margin with good risk management.

Having such set percentage to protect your assets and capital for long way trading is very effective means of protecting your trading position and also to have a long way trading time which is something that most traders may not be doing based on the expectations from trading most especially when you are trading cryptocurrency such as the most volitile asset's that have high tendency of giving a pump market.
That is far from the overall point in the ops but based on your above analysis, having such a backups is with the aim of taking potential small profits, if that be it and you can remain consistent with such approach and be able to remain at profits more than your loses so regardless of the amount of profits it will not matter much
Stop lose is very important feature for trader's but just a few traders make use of the stop lose features, like myself, I hardly use stop lose, since I have a single trading piar which is Bitcoin and at each point I am confident that my position can not get liquidated before I come back online to monitor my trades and although when I have any need for stop lose is when iay be trading altcoins that have highly volitile market, such coins can't be trusted for anything so there is need to use stop lose.
Cryptocurrency trading has diverse aspects and each of them have their advantages and limits, and at that we have to carefully have a think over our decision, because at times since the market is unpredictable, one could gamble with the fund's to accumulate more profits if the market give you a discount price which you know is a temporary discount price, opening a position at that point give you opportunity to accumulate more profits.

Having extra reserve fund will be necessary and a must to protect our trading position when its almost liquidation so you can open position to back up your previous trade. I can use leverage 25% or more and use 10% or less of my capital. I don't chase a bigger profit at once but I prefer to take profit for a small amount but continuously based on the market situation.

But don't forget to use stop lose feature if the market position can go down deeper. That will prevents you from the lose and you can open a new position based on the market movements.

No need to chase the market by opening more position when you sure the market will go down deep. In this matters, we need to be careful with the market moves so we can decide carefully.

It is a most stupidest thing practically in trading especially derivative trading types.

I know, you can hope that by having reserved fund in your account, when your trading position goes wrong, you can transfer reserved fund to your trading account, and increase value of collateral to avoid liquidation. Why I say it is stupid practice?

At the end, you will lose your reserved fund too because liquidation will come. You can be lucky enough to avoid liquidation in some trades with this approach but repeating it many times, you think it is safe and you will become more carelessly in trading. Then market will have times of more volatile and all your fund in collateral will be liquidated.

My advice is don't use this approach. If you trade with leverages, use Isolated margin, and if position is bad, close it, accept the loss, cut loss, or worse practice let it be liquidated. Never deposit more money just hope that you can rescue your position.

I always do this, having some spare fund in my future account, basically allowing my trade to hold until the next resistance, mind you I trade 100x-200x leverage sometime, what matter is the capital, when you trade on high leverage, be sure to use only 1-2% of your entire future account's worth and you're set, if the market dumped, you can still tolerate 5% floating loss until touching the next resistance and the market somehow bounced back again.

the problem with most of future trader that are too scared with high leverage is that, they use it in the wrong way, going all in with 100x leverage, of course you will get your account explodes within short time because the trade is irresponsible trade without risk management whatsoever, most of high leverage traders that I know only use small capital but frequent.

Your plan works only on cross-margin mode it won't work on isolated margin. If you simply want to avoid liquidation, use the stop loss to reduce your losses rather than holding your trading position for an extended period of time because we do not know how long it will recover, and if you continue to hold that position and fund your account, your losses will be huge until you run out of funds and your account might end up liquidated.

So, for me, better set a stop-loss in this case while you are using high leverage. I tried to be liquidated, and all my other trading on spot trading is gone in cross-margin mode. That is why I continue to use stop loss to avoid further losses.

Bitcoin is definitely the way to go, my bitcoin is at binance staking right now, it doesn't give much return, last I remember it was something like %2 or even lower if I am not wrong, but it's better than zero so I keep it there instead of trading with it. I believe that is going to be the way what we are seeing and what we should be considering this to be growing to be a bigger and we could profit so much from it.

When it comes to shitcoins, I am not against them and I believe they have a purpose to play in the crypto world as well, while we may not like them, we can't argue they are useless neither. The individual shitcoin could be useless and terrible, because in that situation you are looking at just one of them, but the concept of shitcoin, as in thousands of them even tens of thousands of them, when combined, has a value in crypto world. What value is that? It's the idea that bitcoin may not give you 100x return, but something else might, so make a x2 profit with bitcoin and then chase x100 with your profit.

This is a risk management strategy that I think works perfectly for people because other than you just simply protecting your position if the asset is not even on the exchange it is also a good way to safeguard your funds but if it is on the wallet it is simply just to move some back to the spot or funding wallet on the same exchange and then add from their when liquidation looms. Another way some people protect their capital is through using isolated margin where they only add positions when the market is facing liquidation, but this isn’t as smooth as the other way.

When you have your capital separated you avoid the risk of losing all when an unknown or sniper liquidation occurs. For me I use cross margin with my funds intact but my stop loss is certainly at a position where I can afford the loss that comes when hits and I can’t get liquidated without the stop loss been triggered

The more margin you have in your account, the further away the liquidation point will be from your position. But it must be remembered that there may be unforeseen situations in the market, which may lead to a dump. In this case, not only your position will be liquidated, but also the entire deposit that you held to maintain the position. So in any case, do not forget to set a stop loss.

Very clear analysis there, and born out of long term trading experience, having $2500 total capital and risking $500 on the 10x trading position is somewhat a cool attempts that keeps the far away from liquidation since at list the $2000 set aside fund's will go a long way to protect the position and if the assets is good like bitcoin for example, the trader will be in the best and safest trading zone, that will lower his or her risk to it bearest minimum within the trading period.

Some traders are doing it.

Example is a trader that has $2500 for trading. He can keep $2000 in his wallet and trade with $500 and use it to open 10x position. If he sees that it is getting up to liquidation price, he may decide to fund it more with extra $500 and so on. The $2500 means the trader only have plan of using 2x leverage which is $5000.

I don't know if this topic have been discussed over here before, if it has, please point my attention to it and I will have the thread deleted at once, but until then I just say I should bring up this discussion for those deravative trader's who risk higher with high leverage that is at least 10x and above, please avoid comments if your views is about how to trade with low leverage and warning of trading with small amount.
Back to the point of view!

How do you think about having some extra reserved fund to protect your trading position when it near liquidation, because from what I have discovered on deravative trading position most especially when you rolling on high leverage and opening the position with large amount of USDT, but along the line because of sharp market drop in you position you forced to get liquidated there by incurring loses which is the reason why many think that trading is risky and full of loses.

So what about in other to prevent the above event from happening what about reserving extra funds aside from your trading capital to act as a protecting shild from liquidation, this way you protect your assets entry point and Capital from total liquidation.

Please Note this is not applicable to shit coins, but only on bitcoin because only bitcoin is what is stable enough that don't get dumped to Zero like some altcoins does.