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Bull markets make traders feel invincible. Prices keep pushing higher, pullbacks look shallow, and social feeds fill with screenshots of massive gains. In that environment, leverage feels like a shortcut to wealth why take a slow 20% move when you can multiply it five or ten times? The problem is that leverage doesn’t just magnify profits. It magnifies mistakes, timing errors, emotions, and tiny market fluctuations that barely matter to spot traders.
At its core, leverage shrinks your margin for error. When you open a highly leveraged position, the market no longer needs to reverse dramatically to hurt you. A normal intraday wick, a funding-rate flush, or a quick liquidity sweep can be enough to liquidate the trade entirely. In bull markets, volatility often increases rather than disappears, because rapid upside attracts speculators, forces short squeezes, and triggers cascades of liquidations in both directions.
One of the biggest traps is confusing trend direction with entry precision. Yes, the market may be in a clear uptrend—but even the strongest rallies breathe. They pull back to support, sweep lows, and shake out late buyers before continuing higher. A spot investor can ride through those dips. A trader running extreme leverage cannot. They’re forced out at the worst possible moment, often right before the trend resumes.
Another silent killer is position sizing. When leverage is high, traders usually allocate too much of their account to a single idea because the potential return looks irresistible. This concentrates risk so heavily that one bad entry can wipe weeks or months of steady gains. In a bull market, where opportunities are plentiful, blowing up on one over-sized trade is especially tragic—it removes you from the game just when conditions are most favorable.
Psychology makes the situation worse. After a few winning leveraged trades, confidence turns into overconfidence. Stops get wider or removed entirely. Entries become rushed. Traders chase green candles because “everything is going up anyway.” That mindset works—until it doesn’t. When the inevitable sharp pullback hits, fear replaces greed, positions are closed at the bottom, and accounts shrink far faster than they grew.
Funding costs and fees also eat into leveraged profits more than most people expect. In crowded long conditions, funding rates can turn heavily positive, meaning you pay continuously just to hold the position. During slow consolidations inside a bull market, these payments quietly drain capital while you wait for the next breakout. Spot holders feel nothing; over-leveraged traders bleed in the background.
There’s also the problem of survivorship bias. You constantly see the screenshots of traders who caught the top-to-bottom move with 20x leverage, but you rarely see the hundreds who were liquidated along the way. Bull markets create legends—and cemeteries—at the same time. Most of the capital flows to the patient participants who compound steadily, not to the ones swinging for home runs every trade.
Ironically, bull markets reward restraint more than aggression. Moderate leverage—or none at all—lets you stay in trades longer, withstand volatility, and think clearly instead of reacting to every five-minute candle. It gives you flexibility to add on dips, reduce exposure into strength, and rotate into new opportunities without being forced out by a single spike.
In the end, over-leverage doesn’t usually kill traders because they were wrong about direction. It kills them because they were right too early, sized too big, and gave the market no room to breathe. The goal in a bull market isn’t to make the fastest money possible—it’s to stay alive long enough to benefit from the entire cycle. The traders who understand that are the ones still standing when the trend finally peaks.
#KevinWarshNominationBullOrBear