How to Decrease the Risk of Margin Liquidation?
Approach 1: Utilize margin wisely
In the case of the BTC/USDT margin market, let's consider a scenario where the maximum leverage is 5X. When borrowing funds, you have the ability to control the leverage level based on your acceptable risk rate. For instance, if your initial capital is 10 USDT, the maximum borrowing amount would be 40 USDT. However, you can opt to borrow only 10 USDT, which would result in a 2X leverage.
Approach 2: Implement timely stop-loss measures
When the risk rate approaches the liquidation threshold, reducing the number of open positions can help mitigate the risk of liquidation.
Approach 3: Increase the margin
By transferring additional assets to your margin account, you can decrease the risk of liquidation.
Please note that these methods aim to reduce the risk of margin liquidation, but they do not eliminate it entirely. Engaging in margin trading still carries inherent risks, and it is important to thoroughly understand the market, implement proper risk management strategies, and only trade with funds you can afford to lose.