The moment the screen flashes red, five years of savings are gone. This is not the beginning of a story, but the end for most leveraged traders.

When I first traded futures, I deposited 10,000 USDT into my account. Seeing the big "10x leverage" on the exchange page, I got excited—thinking that even if I guessed wrong, I would only lose some pocket money. As a result, I opened a position of 50,000 USDT. The market just fluctuated a bit, and my account was wiped out instantly. I was so shaken that I couldn’t hold my phone.

Why did I get liquidated? Price fluctuations exceeded expectations, and the margin was insufficient. I later realized that what I thought was "10x leverage" actually carried risks that could be dozens of times the principal. Leverage amplifies profits but also proportionally magnifies losses.

**The essence of liquidation is mathematics**

The technical term is "forced liquidation"—when your losses exceed your margin, the system automatically sells your position to prevent owing money to the exchange.

Why is liquidation so easy? Because leverage is a magnifying glass.

Taking Bitcoin as an example: using 10,000 USDT to open a 10x long position at an entry price of $50,000. If Bitcoin drops to $45,000, a 10% decline, your loss is already 100%. The exchange immediately forces liquidation, and your 10,000 USDT is gone.

And this is just the beginning. If the price continues to plummet, things get worse—because the liquidation price could be much lower than you expect.