What’s wrong with this strategy? (10x long, stop loss before liquidation price)

I’m trying to understand if I’m missing something while creating a strategy that I’d like to test out.

Let’s say I open a 10x leveraged position using USDC and I know the liquidation price.

I place a stop-loss 10% above the liquidation price.

I understand that this can mean I can lose some percentage of my investment. I understand that I usually pay fee on the total position.

But is that all the downside?

I want to understand what I’m working with because it sounds it can be quite profitable – keep profitable positions open indefinitely, losing positions will be closed automatically with tolerable loss.

Interested in your thoughts!

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7 thoughts on “What’s wrong with this strategy? (10x long, stop loss before liquidation price)”

  1. Leverage does not matter all that matter is position size.


    I can leverage 10x with a 1$ risk stop or i can spot trade with a 10$ stop.

    If my capital is 1000$ either way I’m risking 1%

    Understanding risk and how to position should be number one priority. The fact you are talking liquidation price and leverage to me means that you lack a basic understanding of how to calculate risk properly and you should study on that

  2. Are you talking about leverage through a lending protocol like AAVE / Compound or a synthetic trading platform like Synthetix / GMX?

  3. What’s the point of the SL here? If I understand correctly, you already risking 90% of your initial amount.
    Leverage 10x can be “moderate” or super risky depending on the volatility of the underlying asset.
    If the price drops 10%, your leverage position is gone…and 10% is nothing in crypto.

    My advice: don’t focus on specific amount/leverage. Try with 1x/2x and focus on execution. I.e. making a plan, where to take profit (exit the position) and calculate your SL (Risk-reward ratio) accordingly

  4. I don’t even understand your question to be honest. It seems to be:

    “What do you think of investing in something and then protecting myself using a stop loss order?”

    “What do you think about 10x leverage? That sounds cool.”

    or both. Either way, are you asking if stop loss orders are good? Or if leverage is a good idea?

    Yes, you can 10x leverage. Anyone can. And anyone can use stop loss orders. They are just tools that can be used in trading or investing.


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