Trading derivatives without setting a stop-loss is, to put it bluntly, actively setting yourself up for a big loss. I only fully understood this principle after spending a seven-figure sum.

Whenever I see another fan blow up their account by stubbornly holding onto a position, I think back to my own past mistakes.

I remember in March 2023, BTC surged from 28,000 to 35,000. I truly believed it would retrace, so I immediately opened a 5x short position. But what happened? The market didn’t go down at all. I stubbornly held on, with the thought "It will definitely correct," until I watched my account go to zero. A similar story repeated in January 2024—SOL broke through $120, I chased high with a 10x long, and then it dipped to $98, ending my account once again.

Almost every story of liquidation starts with the phrase "Just hold on a little longer." The market is the best at curing all kinds of disbelief. By the time you realize it, you’re already out of money.

**01 Why is a stop-loss so heartbreaking?**

Honestly, a stop-loss tests human nature the most. Watching your position get stopped out and realizing a loss is frustrating for anyone. Many would rather gamble that "the market will reverse in the next second" than swallow that bitter pill. I know a guy who turned 100,000 into 1,000,000 with a 70% win rate, but one time he got too serious and kept increasing his position in the wrong direction, eventually returning to square one. This circle never lacks trading geniuses; what’s truly rare are those who can survive long-term.

Regarding technical stop-losses, they seem reliable—setting points based on support and resistance levels, and cutting when the price breaks important levels. The problem is that technical indicators often lag and can give false signals, leading to traps.

There’s also the method of using a percentage of capital for stop-loss—limiting each trade to a maximum loss of 2% of total funds. This can lock in risk. But during intense market volatility, this rule can easily fail…