The essence of trading is quite simple: buy at a lower price, sell at a higher price. This is the most common strategy for trading crypto, but not everyone knows that you can make money on stock trading in other ways. For example, many traders get a profit by shorting their assets. How to short crypto? What is it all about? Today, we’ll try to find out!
How to Short the Crypto Market: Basic Information
How to short the crypto market? Well, the cryptocurrency market has high volatility, which distinguishes it from other markets. A sustained rally can be quickly followed by a sharp decline amid any minor fluctuations. If you know basic rules, then such moments will become an opportunity to get profit.
At the same time, it’s important to understand that when ‘playing short’ the risks of a market participant are much higher. If the price falls by half, you can easily earn money, but a doubling of the price is a loss of investment in the amount of 100%.
So, how to short the crypto market? Opening short positions with leverage is a rather complicated and risky manipulation. This is particularly relevant for altcoins with high volatility and low liquidity. To open short positions, you should be familiar with the basics of technical and fundamental analysis, know the specifics of the market and the psychology of its participants. In practice, not every trader who knows how to make money on longs will be able to profit from the market shorts.
How to Trade Short Term Crypto: Key Aspects to Know
How to trade short term crypto? First of all, in order to start shorting, a trader needs to select cryptocurrencies, the value of which may decrease in the future. Next, you need to determine the moment of entering the market, get a loan, and place an order. The success of the operation and its profitability depend on the correctness of the decisions made.
How to trade short term crypto? Those who want to play the stock market with the hope of decrease in value should take into account several points:
-
- Market growth is always gradual, but a bearish trend takes place quickly. To get the maximum income from a short, a trader must learn to choose the right entry points.
-
- Shorting allows you to earn a lot and quickly, but wrong actions can not only fail to bring results but also lead to a loss.
-
- The profit largely depends on the size of the initial deposit. The larger the initial size of the deposit, the more profit you can take.
How to Place a Short Sale Order Crypto: Key Steps to Know
How to place a short sale order crypto? The algorithm of a trader’s actions to open a short position is identical for almost all trading platforms:
-
- Choose a cryptocurrency exchange, get familiar with its commissions for depositing and withdrawing funds, the rules for providing leverage and trading. It should be noted that not all exchanges allow you to trade with leverage.
-
- Register on the exchange and deposit money into the exchange account. Sometimes, in order to gain access to shorts and trading, a trader needs to verify the account.
-
- Analyze the market and determine the downward trends.
-
- Go to the margin trading section, select the debt cryptocurrency and its volume.
-
- After the loan is issued, a sell order is placed. Just wait until it closes.
-
- Wait until the market situation meets expectations and buy the asset back at a reduced cost.
Once you’ve found out how to place a short sale order crypto, let’s consider another important aspect. As a rule, leverage is provided by a trading platform at low interest rates. However, it must be taken into account when planning transactions, since this can reduce profits or even lead to a loss.
It’s also worth noting that on most trading platforms you won’t have to pay a brokerage commission for providing leverage if the entire shorting process can be completed in one day.
How to short crypto? What other interesting facts do you know? Feel free to share your knowledge in the comments. Have a great weekend!
Leave a Reply