I was jolted awake in the middle of the night by a barrage of frantic calls. On the other end was a trembling voice with a Jiangxi accent: "My 6,000 yuan... it's just gone..."

We switched to video, and on the screen was a guy in his early twenties, his eyes red like a rabbit's. The situation was simple—he had put all 5,800 yuan of his capital into a 5x leveraged long position. The market only swung 3 points, and his account balance went straight to zero. I asked him to send me a screenshot, and after a quick look, I spotted the fatal flaw: he hadn’t set any stop losses, and his position size was 96.7% of his entire account.

This kind of thing happens every day. A lot of people think "going all-in is the way to get rich," but in reality, playing full leverage is like crossing the street with your eyes closed—it’s not about if something will go wrong, but when. In the past five years, eight out of ten liquidation cases I’ve seen were due to poor position management.

Let me break it down for you: Suppose you have 800 yuan. If you put 750 yuan into a 5x leveraged long, a 6% move against you and you’re done for. But if you only use 75 yuan with the same 5x leverage, it would take an 87% price drop against you to get wiped out—your risk tolerance is over twelve times higher.

To put it simply, getting liquidated isn’t really because “the leverage is too high.” You can use 10x or even 20x; the key is not to fire all your bullets at once. The biggest mistake the guy from Jiangxi made wasn’t using 5x leverage—it was putting nearly 97% of his capital into a single trade. With that kind of move, the market just has to sneeze and your account is in the hospital.

The most common mistake newbies make is confusing "high leverage" with "heavy position size." The former is just a tool; the latter is what’ll kill you. Remember this: leverage can amplify your gains, but only your position size determines how fast you’ll lose everything.