Seeing a major futures exchange once again raise silver margin requirements by 30%, marking the third adjustment in a short period. This move may seem routine, but it conceals a deeper risk mechanism within the market.

Looking back at history, the famous "May Storm" of 2011 serves as a warning. That year, the exchange increased margin requirements five times within just nine trading days, ultimately leading to what? Not a gentle decline, but a direct trigger of a stampede.

The mechanism is straightforward: when margin requirements rise, market liquidity is drained. Those heavily leveraged long positions can't easily add more funds, forcing them to cut losses and close positions. One person sells, followed by others, creating a chain reaction. Silver prices fell over 30% within two weeks, plunging into a multi-year bear market.

The key point is that once this kind of risk ignites in the market, it’s very difficult to self-extinguish. Risky traders will reduce leverage, and when they do, they must sell. Others follow suit, reducing leverage as well. This process resembles a domino effect, with each piece falling one after another. Ultimately, as the margin string is continually tightened, the market’s fragility is repeatedly amplified.