Why is high leverage so scary?
1. Amplified profits, but also amplified risks
Leverage allows you to control a larger market share with a small amount of capital, but this also means that the market only needs to fluctuate slightly for your principal to be wiped out. For example, with 20x leverage, if the market drops by 5%, your principal will be liquidated.
2. The market is always unpredictable
The volatility of the cryptocurrency market is extremely high; a single piece of news or a panic can cause the market to reverse instantly. What you think is an "absolute opportunity" may actually be a bottomless abyss.
3. Human greed and fear
Leverage can make people greedy, constantly thinking about making more money while ignoring risks. Once the market moves against you, human fear can leave you helpless, leading to poor decision-making.
4. The rules of the exchange
Many exchanges are essentially designed as "liquidation machines" that profit from fees and liquidations. The more frequently you trade and the more leverage you use, the more they earn. And you are just their "crop."
Don't let leverage ruin your life
Some say, "You can't make money without leverage." But have you ever thought that surviving is more important than how much money you make? High leverage can indeed help you make quick money, but it can also lead to losing everything overnight. Most of the time, you cannot afford this risk.
The cryptocurrency market is already risky enough; the volatility of spot trading can make your heart race. Why add more leverage on top of that? Remember, wealth accumulation is a long-term process; money won through gambling will eventually be lost due to gambling.
Remember: Those who want to make quick money often end up losing it even faster. If you really want to survive in the cryptocurrency market, preserving your capital and being steady is the way to go. Stay away from high leverage, and don't let greed ruin everything for you.
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