Who can provide a helpful answer here?

[Dr.Bitcoin_Strange]

So, I have been meaning to ask this question to experience traders only. You guys know that we have several types of traders but my question is based on those individuals that are known as "position traders" We can tell that position traders hold trades for weeks or months and my question is, how are they able to hold trade for weeks or months without the price of their pair touching the liquidation price meanwhile price is always moving up and down. Is there any extra strategy to it which am not aware of? Please someone who knows better should educated me.

[Oshosondy]

It is because of two reasons.

The first is the leverage they are using to trade. If bitcoin is at $50000 and a trader use 1x leverage, the liquidation price for long is less than $1000, and $100000 for short position is the liquidation price. Can you see how the liquidation price is far. But the more the leverage the closer the liquidation price.

The second is that they do not trade those shit coins that are highly volatile.

[Antotena]

So, I have been meaning to ask this question to experience traders only. You guys know that we have several types of traders but my question is based on those individuals that are known as "position traders" We can tell that position traders hold trades for weeks or months and my question is, how are they able to hold trade for weeks or months without the price of their pair touching the liquidation price meanwhile price is always moving up and down. Is there any extra strategy to it which am not aware of? Please someone who knows better should educated me.

One of the best way they avoid liquidation is when their leverage is cross margin. When you open cross margin position, let's say you did it with $500 with Bitcoin using 20x leverage and you have liquidation at $70k, once they notice that Bitcoin is coming down and they don't want to close the position on loss because they are still bullish about Bitcoin, they can make another deposit on the position and your liquidation will be move from $70k to probably $65k. The more money you deposit into to your margin, the less risky your trade becomes and you can hold until your aim is achieve.

This is only possible if you have extra funds somewhere to manage your position, if you don't deposit more funds, your position will be liquidated once that price reach mark price of liquidation.

[adultcrypto]

So, I have been meaning to ask this question to experience traders only. You guys know that we have several types of traders but my question is based on those individuals that are known as "position traders" We can tell that position traders hold trades for weeks or months and my question is, how are they able to hold trade for weeks or months without the price of their pair touching the liquidation price meanwhile price is always moving up and down. Is there any extra strategy to it which am not aware of? Please someone who knows better should educated me.

Position traders are able to hold traders for weeks or months because their analysis is on the higher timeframe of weeks and months. They don't use tight stop loss so their stop loss may be as big as the take profit of swing traders. They only manage their lot size in such a ways that it is ideal for their equity so that they don't have margin call. So, the simple answer is that the timeframe where the trades are analyzed and executive permit them to hold trades for that long without being stopped out.

[Dr.Bitcoin_Strange]

It is because of two reasons.

The first is the leverage they are using to trade. If bitcoin is at $50000 and a trader use 1x leverage, the liquidation price for long is less than $1000, and $100000 for short position is the liquidation price. Can you see how the liquidation price is far. But the more the leverage the closer the liquidation price.

So, does it mean that they only use a very low leverage like 1x to 5x being fully aware that if the price of that assets moves up or down by -10% or +10% within a month of Holding that position, they are only going to make a 10% profit/lose on their position because or the 1x leverage? For example, entering a long position for BTCUSDT with position size of $20k and let's say price moves up by 10% within that one month, the person is just going to make small profit with 1x.

The second is that they do not trade those shit coins that are highly volatile.

Yea, very aware they only trade potential coin like Bitcoin, thank for the feedback.

One of the best way they avoid liquidation is when their leverage is cross margin. When you open cross margin position, let's say you did it with $500 with Bitcoin using 20x leverage and you have liquidation at $70k, once they notice that Bitcoin is coming down and they don't want to close the position on loss because they are still bullish about Bitcoin, they can make another deposit on the position and your liquidation will be move from $70k to probably $65k. The more money you deposit into to your margin, the less risky your trade becomes and you can hold until your aim is achieve.

This is only possible if you have extra funds somewhere to manage your position, if you don't deposit more funds, your position will be liquidated once that price reach mark price of liquidation.

So, are you trying to say that, while using a "Cross margin" If you have enough capital in your balance, then your liquidation price will be more far compare to when you only have a less capital? For example, your liquidation price will be different when you have a balance of $100 and enter a position size of $10  and  also when you have that same balance ($100) and enter a position size of $50? Will the liquidation prices be different?

[sheenshane]

Ain't expert in position trading but based on what I've understand you might have those combinations that mentioned above.
The combination of low leverage, extra funds for margin, careful entry points, and wide stop losses to maintain your position trades over time in dealing high risk on the market price volatility.  

Is there any extra strategy to it which am not aware of? Please someone who knows better should educated me.

Nothing more if you're good on this technical analysis and resistance levels, moving averages, and trend lines that are commonly used in position traders to identify which points they enter and hold that position until it reach their profit targets.  Then, you can apply the said above by adding fund, by adding more funds when the market moves against you is good strategy that can help to extend the life of a position, especially for longer-term trades.

[Dr.Bitcoin_Strange]

So, I have been meaning to ask this question to experience traders only. You guys know that we have several types of traders but my question is based on those individuals that are known as "position traders" We can tell that position traders hold trades for weeks or months and my question is, how are they able to hold trade for weeks or months without the price of their pair touching the liquidation price meanwhile price is always moving up and down. Is there any extra strategy to it which am not aware of? Please someone who knows better should educated me.

Position traders are able to hold traders for weeks or months because their analysis is on the higher timeframe of weeks and months. They don't use tight stop loss so their stop loss may be as big as the take profit of swing traders. They only manage their lot size in such a ways that it is ideal for their equity so that they don't have margin call. So, the simple answer is that the timeframe where the trades are analyzed and executive permit them to hold trades for that long without being stopped out.

Guy, no matter the time frame used, it doesn't stop a trader from losing their trade once the liquidation price is met. Time frame is to look through your candle in those different time frame which allows you to make your analysis too.

[Oshosondy]

One of the best way they avoid liquidation is when their leverage is cross margin.

Isolated margin should only be used by professionals and can be used by people that know what it is and when to use it. Most exchanges make cross margin the default and it is not the cause of liquidation. But other causes of liquidation is the leverage the traders are using and also if trading highly volatile coins. Even if cross margin is used, a trader fund in cross margin account can still be liquidated and these two are the common cause of liquidation.

[benalexis12]

So, I have been meaning to ask this question to experience traders only. You guys know that we have several types of traders but my question is based on those individuals that are known as "position traders" We can tell that position traders hold trades for weeks or months and my question is, how are they able to hold trade for weeks or months without the price of their pair touching the liquidation price meanwhile price is always moving up and down. Is there any extra strategy to it which am not aware of? Please someone who knows better should educated me.

If you are referring to futures trading first you will always train yourself to track isolated not on the cross, then as long as you can also train yourself to have Milities in SL.

Besides if for example you have 100 $ funds your leverage should be around 5-10x, you need to treat yourself to your own trader.

[adultcrypto]

So, I have been meaning to ask this question to experience traders only. You guys know that we have several types of traders but my question is based on those individuals that are known as "position traders" We can tell that position traders hold trades for weeks or months and my question is, how are they able to hold trade for weeks or months without the price of their pair touching the liquidation price meanwhile price is always moving up and down. Is there any extra strategy to it which am not aware of? Please someone who knows better should educated me.

Position traders are able to hold traders for weeks or months because their analysis is on the higher timeframe of weeks and months. They don't use tight stop loss so their stop loss may be as big as the take profit of swing traders. They only manage their lot size in such a ways that it is ideal for their equity so that they don't have margin call. So, the simple answer is that the timeframe where the trades are analyzed and executive permit them to hold trades for that long without being stopped out.

Guy, no matter the time frame used, it doesn't stop a trader from losing their trade once the liquidation price is met. Time frame is to look through your candle in those different time frame which allows you to make your analysis too.

You are obviously missing the point. No one said that timeframe stops the trade from hitting stop loss, my reference to time frame is just to give you idea of how position trades are analyzed and executed. You cannot analyse a position trade on a one minute chart using few pips stop loss, you will be kicked out of the market by simple volatility before the market will still go your way. But when the analysis is done on a daily chart, then several noise are filtered and the stop loss and take profits are set at that time frame.

[Dr.Bitcoin_Strange]

One of the best way they avoid liquidation is when their leverage is cross margin.

Isolated margin should only be used by professionals and can be used by people that know what it is and when to use it. Most exchanges make cross margin the default and it is not the cause of liquidation. But other causes of liquidation is the leverage the traders are using and also if trading highly volatile coins. Even if cross margin is used, a trader fund in cross margin account can still be liquidated and these two are the common cause of liquidation.

@Oshosondy, there's one thing I want to actually understand from what
@Antotena said, if he can throw more light, better.

Since I started trading, I mostly use cross margin, although I have used Isolated margin a few times and what I observed is that, if you are using Isolated margin, the liquidation price of that pair you're trading will be very close (near) to the market price but the advantage is that if you are being liquidated, it's just the capital used to enter that position will get liquidated but Cross margin has a far price gap from market price but the disadvantage is that when the market is against you and you decide to close the trade, you will lose your position capital and also some funds from your balance.

But I want to understand now, based on what @Antotena said, does having a large balance contributes to increasing liquidation price gap? For instance if you have a balance of $1k and enter a position of size of just $50, you balance will be $950, will that make your liquidation price gap to increase? (It's cross margin).

[Oshosondy]

But I want to understand now, based on what @Antotena said, does having a large balance contributes to increasing liquidation price gap? For instance if you have a balance of $1k and enter a position of size of just $50, you balance will be $950, will that make your liquidation price gap to increase? (It's cross margin).

Yes, the liquidation price will be very far.

Long position. Isolated margin. $50. 1x leverage. The liquidation will be around $100000 if you open the position around $50000.
Long position. Cross margin. $50. 1x leverage. The liquidation will be around $1.9 million if you open the position around $50000.

Only $50 will be liquidated in isolated. The whole $1000 will be liquidated in cross margin.

[Zaguru12]

Since I started trading, I mostly use cross margin, although I have used Isolated margin a few times and what I observed is that, if you are using Isolated margin, the liquidation price of that pair you're trading will be very close (near) to the market price but the advantage is that if you are being liquidated, it's just the capital used to enter that position will get liquidated but Cross margin has a far price gap from market price but the disadvantage is that when the market is against you and you decide to close the trade, you will lose your position capital and also some funds from your balance.

But I want to understand now, based on what @Antotena said, does having a large balance contributes to increasing liquidation price gap? For instance if you have a balance of $1k and enter a position of size of just $50, you balance will be $950, will that make your liquidation price gap to increase? (It's cross margin).

It is simply as stated above, isolated margin is simply restricting the trade to just the capital used for that trade. Where the cross margin is actually expanding the capital beyond that and to your entire fund in the trading wallet. The liquidation price is simply telling you the price at which the entire capital you allocated to the trade will be used and you will be without any capital, so ideally the isolated Margin has a closer liquidation price to the entry than the cross due to the capital size.

For position traders or swing traders as they are mostly know holds trades for long base on their capital which determines the liquidation price, less volatility and also sometimes little leverage. Someone with a little capital can never swing a trade because the liquidation might easily get hit before trade plays out

[_BlackStar]

Dr.Bitcoin_Strange - have all your questions been answered?
I'm not used to asking so many questions without doing some research of my own on the market and putting in some capital. It may not take much - but it can at least give me a lot of insight into what I need to know.

But about futures trading - I don't do it as often as you, in fact I tend to avoid it even though I can actually get returns from some trades. Instead of trading - I tend to optimize my investment portfolio for the long term, but there is nothing wrong with anyone who likes trading.

[Ojima-ojo]

So, I have been meaning to ask this question to experience traders only. You guys know that we have several types of traders but my question is based on those individuals that are known as "position traders" We can tell that position traders hold trades for weeks or months and my question is, how are they able to hold trade for weeks or months without the price of their pair touching the liquidation price meanwhile price is always moving up and down. Is there any extra strategy to it which am not aware of? Please someone who knows better should educated me.

First it depends on the leverage their are using, let say for someone who set a 5x leverage level, his potential liquidation price will be far from touching compared to another traders who open his position on a 19x leverage position, but in all, if you have enough cash flow you can refile to extend your liquidation price when you see the market going against you and closer to your liquidation price.


Most times those that trade future with bitcoin, have more confidence in the price of bitcoin, and can easily opened their trading position, and be at peace knowing that the price of bitcoin can not sunddenly crash that will liquidate their holdings within a short period of time.

[shinratensei_]

they probably used margin account and always mantain their margin, whenever it about to touch the liquidation price they just funded their account with more and more money, hoping one day the price gets back up again and they can either close the trade in break-even or if the market looking good, they can just mantain their position and wait until they become profitable.

as always with future trading, the key is always money management, you just need to not go too overboard using all your capital as margin and causes your position to be close to liquidation price, using low leverage helps too as mentioned by other people here.

of course if market just sucked and there's big dump everywhere you might risk blowing up your entire account with cross margin. that's the disadvantage.

[SquirrelJulietGarden]

So, I have been meaning to ask this question to experience traders only. You guys know that we have several types of traders but my question is based on those individuals that are known as "position traders" We can tell that position traders hold trades for weeks or months and my question is, how are they able to hold trade for weeks or months without the price of their pair touching the liquidation price meanwhile price is always moving up and down. Is there any extra strategy to it which am not aware of?

They have risk of liquidation too, they're not free from liquidation.

If they have big capital, they can have better and deeper capital resources as collaterals. It can help them to reduce or minimize risk of liquidation by holding their positions very long time. However, if they have bad capital, collateral and position management, risk of liquidation will be bigger and holding positions a long time in this case will be more dangerous.

Institutional investors can be liquidated too, and market does not care how much capital an institutional investor has and use for their positions.

[Jegileman]

For position traders or swing traders as they are mostly know holds trades for long base on their capital which determines the liquidation price, less volatility and also sometimes little leverage. Someone with a little capital can never swing a trade because the liquidation might easily get hit before trade plays out

Swing traders mostly don’t even settle for a very volatile pair to trade. They have this patient in them to wait for the market to stay for weeks and month to reach their target before taking their take profit, so they don’t go for volatile pairs and depending on their capital they’re using to trade, it determines more the leverage they’ll use that won’t still liquidate them in a long time till their target is reached.

First it depends on the leverage their are using, let say for someone who set a 5x leverage level, his potential liquidation price will be far from touching compared to another traders who open his position on a 19x leverage position, but in all, if you have enough cash flow you can refile to extend your liquidation price when you see the market going against you and closer to your liquidation price.

I don’t know how effective this could be for swing traders by shifting their liquidation price and adding more funds so that they don’t get liquidated. I believe the trust the game in the market to go their way and not losing all of their capital will be the reason for that. As for normal traders, that’s not an effective way to trade the market. After the price of the market to stop you out has been set, you shouldn’t be tempted to increase it because it risks you losing more of your capital and extra funds added.

[SquirrelJulietGarden]

I don’t know how effective this could be for swing traders by shifting their liquidation price and adding more funds so that they don’t get liquidated. I believe the trust the game in the market to go their way and not losing all of their capital will be the reason for that. As for normal traders, that’s not an effective way to trade the market. After the price of the market to stop you out has been set, you shouldn’t be tempted to increase it because it risks you losing more of your capital and extra funds added.

Swing trading does not relate to adding more funds to your account for avoiding market squeeze and trading position liquidation. If you open your trading position, and have to add new fund to defend your trading position as well as your collateral, it's bad trading practice from you.

I say it is bad practice because soon you will no longer have enough free, unused fund to add to your trading account, and this means you will come nearer to liquidations. Moreover, it's very risky practice as rather than losing your original fund for example 0.01 BTC, by adding new fund, new fund, in many rounds, you will end up with 0.02 BTC  or 0.1 BTC and at the end, you will be liquidated with bigger fund.

A good and experienced trader does not trade and manage trading capital like this, if he sees a trading position is bad, it's time to close it and move on. Closing your bad trading position is best practice to defend your trading capital and minimize your loss.

[Dr.Bitcoin_Strange]

Thanks to Oshosondy, SquirrelJulietGarden and Antotena, your replies was able to answer my question. Low leverage and having a large sum of capital in your trading account can actually make liquidation price to be very far.

I got to see an account that had $4k+ as their balance and they entered a BTCUSDT "Long position" With just a position size of $200 which left them with $3k+ balance, it was a cross margin trade with 20x leverage, guess what the BTC liquidation price was? It was $8k+, which we all know that it's never possible for BTC to drop to $8k.