It feels like being just three steps away from liquidation when your loan position is near the liquidation line—and it really isn’t something that a “hold on a bit longer” can fix; your mind automatically starts coming up with excuses. My approach is basically three things: first, save a screenshot of the position as evidence (for later when you need to “prove you were right”); then immediately calculate the worst-case scenario of how much I can withstand. If I can add funds, I top up a little to push the level further away. If I can’t, I simply reduce the position—don’t expect the market to “reason with you.”

Recently, that whole “yield stacking” thing involving re-pledging and shared security has been criticized as a nesting doll scheme, and I also feel a bit uneasy. No matter how pretty the yield looks, the liquidation line doesn’t care about your feelings. To put it simply: when you’re close to the red line, protect yourself first—don’t count on also cleanly pocketing all the profits at the same time.

I still have that screenshot from earlier… every time I want to add leverage, I pull it up and look at it—it works pretty well.