Many people trading derivatives jump straight into full position mode, and the reasons sound reasonable—resisting volatility and avoiding liquidation. But this is a huge misconception.

Full position mode is definitely not a get-out-of-jail-free card for heavy holdings. If you really open ten times leverage and go all-in, one reverse market move could not just cause some losses but wipe out your entire account.

I've seen too many cases. Someone has $5,000 in their account, and they immediately use $4,800 to gamble on short-term trades. When the market fluctuates, liquidation happens instantly, leaving no time to react. The key is that the original purpose of full position mode is completely misunderstood—it’s meant to give you an extra buffer, not to risk your life on market swings.

The same tenfold leverage looks the same, but some traders cut their positions decisively when they lose, and their accounts stay intact; others stubbornly hold on and end up losing everything. What's the difference? It all comes down to position allocation.

Here's how we think about it. Suppose your account has 1,000U. Using 100U to open a 50x leverage position, even if you make a wrong call, you have enough time to cut losses, and your principal is basically protected. But if you invest 900U with only 10x leverage, even a slight market fluctuation could wipe out your entire account.

So instead of obsessing over how many times leverage is safe, ask yourself: How much of my capital am I risking on this trade? Do I have a stop-loss set? If the market moves against me, can I withstand it? These are the key to survival.

I also use full position mode in my own trading, but only under certain ironclad rules—these are the bottom line for protecting your account.