How Margin Misuse Triggers Liquidations in Bear Markets

Bull markets reward boldness, but bear markets expose unpreparedness. Volatile assets and high leverage turn margin trading into a double-edged sword—magnifying gains but also critical mistakes. Traders often enter downturns with illusions of control, only to face liquidation spirals. In 2025's increasingly volatile landscape, the margin for error has never been thinner.

Margin misuse isn't always reckless. Many traders believe they follow best practices—using isolated margin, keeping leverage under 10x, and avoiding oversized positions. Yet pitfalls lurk: misjudging maintenance thresholds, misconfiguring mobile leverage settings, overestimating isolated margin's protection, or neglecting stop-losses during thin liquidity. These oversights go unnoticed in rising markets but become liabilities when prices fall.

Bear markets accelerate risks: volatility spikes, spreads widen, and liquidity evaporates. Tools like isolated margin or partial stop-losses fail without precision. Cross-margin users see unrelated positions dragged into liquidations. Isolated margin traders discover too late their collateral buffers are inadequate. The lesson is clear—margin discipline separates survivors from casualties when the cycle turns.