Recently, a seasoned trader increased his position on a leverage platform, investing an additional $250,000 to pursue a 25x leveraged long position on Ethereum. His total position has now expanded to over $12 million, holding 4,100 ETH. Based on an entry price of $2,944.95, the unrealized profit is approximately $73,000 — sounds good, right? But this is exactly where the problem lies.

The liquidation price is set at $2,888.40. In other words, as long as Ethereum drops by just $12, this entire position will be forcibly liquidated. This kind of close-quarters risk management is like dancing on the edge of a knife when market volatility increases.

The allure of high-leverage trading is that when the market moves in your expected direction, your profits multiply. But the flip side? An unexpected negative news event or a quick downturn can instantly break through your defenses. Especially when there isn’t much buffer between the liquidation price and the current price, any small movement can trigger a chain of liquidations.

If Ethereum can hold steady and break upward, such positions indeed have the chance to rapidly amplify profits. But if it falls below the $2,900 threshold, the risk of forced liquidation becomes very real. This is the cruelest part of leveraged trading — making money feels exhilarating, but losses can come suddenly and unexpectedly.

Ordinary traders need to understand that blindly following high-multiplier leverage is the easiest way to fall into a trap. Staying calm while monitoring the market and managing positions rationally are the keys to surviving longer in volatile markets.