How to avoid liquidation in crypto futures as a beginner

[Sandie19]

Hey guys, I'm new to crypto and trading on a small exchange—you've probably never even heard of it. Last night, there was a flood of altcoins, and I was wiped out by liquidation, even though I had a stop-loss order. It turns out the mark price and the market price diverged so much that the order simply didn't have time to trigger, and my entire $300 deposit went straight into the exchange's pocket. I'm now in shock, trying to figure out how to choose the right platform to avoid such situations, and should I only trust liquid giants like Binance or Bybit?

[Sandie19]

And another question: how do you calculate this safe distance, the buffer between the stop-loss and the liquidation price, so that a sharp move on news or momentum doesn't wipe me out again?

[Mikki32]

It is a difficult situation but it happens quite often on unknown exchanges where there is hardly any liquidity. Your stop loss could not be executed straight away because that is why the experts always warn to stay away from trading on such dubious platforms. Concerning the buffer it is very straightforward: you cannot place a stop loss exactly next to the liquidity. There have to be some fluctuations allowed for price swings, after all. You should check out the material on the iTrusty website. They show crypto liquidation explained in great detail, and they make it pretty clear why 50x or 100x leverage is almost guaranteed to blow you out over time. I was on an altcoin opening spree thinking it was REALLY diversification but it actually was just one huge bet on a bull market. In the end, one squeeze on Bitcoin and your whole account goes up in smoke. What increments of leverage are you generally using and have you considered using risk calculators before you make a trade?