Every trader faces one of the worst events that can happen in the market - liquidation. Termination of a trading order, resulting in a loss of budget, is inevitable throughout an investor's career.

However, even though liquidation seems like a completely negative concept, it is actually a sophisticated trading tool that protects both investors and exchanges.

When I first got into trading about 3 years ago, all I could see were dollar signs. I had no strategy, no plan, no risk management – ​​nothing. All I knew was that I wanted to do it, and the only one who could stop me was God himself.

I will quickly share with you a "funny" story about my first elimination that i will never forget.

I learned the new concept of SMT, sat down and said to myself, “Well, I've found a strategy that will make me a millionaire. Am I ready for something like this?". I remember how I constantly reassured myself: "Well, of course, that's why we got into trading - to get rich." However, if I look back on that day honestly, I remember the hidden nervousness that was the answer to the question I asked myself. The truth was, I wasn't even close to being ready, or I didn't know what it meant to be ready.

I try to never judge people I meet, but I can say this: I would have judged myself 3 years ago more than anyone I've ever met.

Well, the story of my first elimination. I sat down at the computer and honestly, this was my first strategy in life: "If this candle touches this line, I open a long position." Why exactly "this line"? God knows.

I soon learned what the next 3 years of my life would be about: figuring out why "this line" didn't do what I wanted it to do, and how long I could hold out before I lost it all.

On the very first day when my deal was liquidated, I realized two things:

1.I am incredibly stubborn.
2.Trading can take a little longer and I really don't know what I'm doing.
As the tide began to shift against me, a wave of emotions and memories that I had repressed for years came over me. Memories of coaches being hard on me when I played baseball in college. The voices of my friends who said "you won't make it, you need to work 9-5 like everyone else" and so on. Everyone had their own opinion of me in my own head, but that was how my own mind showed me everything I needed to improve on if I wanted to survive in this industry.

I wasn't just a beginner trader – I was a baby when it came to risk management. To be honest, I don't even think I fully understood the concept of marginal leverage (it's scary to admit, but sometimes the truth is ugly). I experienced a baptism of fire when I refreshed the Kraken site and saw the -$ sign keep falling like Jenga until a big fat zero appeared on the screen at the end. I remember sitting and looking at the $ sign that was turning into zeros everywhere and saying to myself, "What happened?". I was "liquidated", the money for which I worked hard suddenly disappeared.

It was the first Me vs. Me test and I don't think I even managed to put my name at the top of the test. I failed faster than anything else in my life. The sudden thought "maybe this is not for me" was immediately defeated by an internal counterargument: "Don't stop and get to work."

I think every new trader sees their favorite online influencer in a Lamborghini and thinks it's easy. Not always, but there is a good chance that your favorite trader is making more money selling courses than he is actually trading.

I think most new traders get "liquidated" simply because they underestimate this beast. Maybe they get lucky on a trade or two and then blind greed takes over to the point where the trader thinks he is invincible and before he knows it he is not following the plan and adding more and more to the position, absolutely not having a stop loss plan.

Always go in with a plan, your plan should never be. I'm just going to risk this security until liquidation, I can tell you right now with 100% confidence that if your strategy is "my liquidation price is my stop", you won't last long in the markets.

Even if you only risk 1-2% of your account balance on each trade at first, over time the obsessive thoughts of "oh, it looks really good, I'll bet more" will start to appear, and your lack of discipline will lead to you setting the same stop at the liquidation price. Even if you felt great about the deal, it worked against you. "But the trade NEVER goes against me, how can that be?". Welcome to the show.

It's not an easy road, but the knowledge you'll gain is far more valuable than any dollar you'll ever make in the market.