There are two sides to every business and they are; profit and loss. If you are not gaining then it means you are losing and vice versa. In whatever area of business one finds himself, it's important to know that losses could or may come at some points. But what is more important is ensuring that your profit margin is very far away when compared to the losses recorded. But in a case where your losses are more than your gains then you are lagging behind in terms of risk and money management. Overall, the business appears unprofitable. So, it is therefore important to learn to manage and/or avoid losses in your business.
The term liquidation is mostly applicable and heard in cryptocurrency futures trading. It is a state where a futures trader losses also all his margin balance and wallet funds. This tend to happen when his or her trade goes extremely and largely against his prediction and expectations. Simply put, liquidation is a state of losing all funds and returning to zero.
There are lots of factors that brings about liquidation and if these factors are dealt with squarely then one will not have to experience liquidation. Liquidation isn't a good experience and it has a way of affecting your trading psychology and confidence. I have experienced it before and I can attest to the fact that no one wants that.
This is the reason I opine that having losses is better than having a zero balance. I see a lot of traders being stubborn and persistent in a trade that shows all chances to lead to liquidation. When once a trade begins to go south, risk management advices one to close the position at some losing level and reserve the remaining funds. Don't try to prove stubborn when in a wrong position else you stand the risk of being liquidated.
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