How to operate short and long positions in the currency circle
The operation guide for short and long operations in the currency circle includes: Short selling: Bet on the price of cryptocurrency to fall, borrow cryptocurrency to sell, and buy to return the loan when the price falls. Go long: Bet on the price of a cryptocurrency rising, buying the cryptocurrency when the price is low and selling it for a profit when the price rises. Note: The cryptocurrency market is highly volatile. Short and long operations usually use leverage to amplify gains and losses. Large fluctuations may lead to liquidation risks and forced liquidation to avoid greater losses.
Short and Long Operation Guide in the Currency Circle
In the currency circle, short selling and long selling are two common trading strategies used to predict and profit from the rise and fall of cryptocurrency prices.
Short Selling
Short selling is essentially a bet that the price of a cryptocurrency will fall. This involves borrowing a cryptocurrency, selling it when the price is higher, and then paying back the loan by buying the same amount of cryptocurrency when the price is lower. The operation process is as follows:
- Lending Cryptocurrency: Lend the target cryptocurrency from a cryptocurrency exchange or lending platform.
- Sell Cryptocurrency: Sell borrowed cryptocurrency when the price is higher.
- Wait for the price to drop: Wait for the cryptocurrency price to drop.
- Buy Cryptocurrency: Buy the same amount of cryptocurrency when the price is lower to repay the loan.
If the price of a cryptocurrency falls, short sellers will profit from the difference between selling and buying. Conversely, if the price rises, short sellers will lose money.
Going long
Going long is a bet that the price of a cryptocurrency will rise. This involves purchasing a cryptocurrency, buying it when the price is low, and then selling it when the price is higher to make a profit. The process is as follows:
- Buy Cryptocurrency: Buy the target cryptocurrency when the price is low.
- Wait for the price to rise: Wait for the cryptocurrency price to rise.
- Sell cryptocurrency: Sell your cryptocurrency holdings when the price is higher.
If the price of a cryptocurrency increases, longs will profit from the difference between selling and buying. Conversely, if the price falls, longs will lose money.
Notes
Short and long operations involve risks. Here are some things to keep in mind:
- Volatility: The cryptocurrency market is highly volatile, and prices can rise or fall significantly and quickly.
- Leverage: Short and long operations usually use leverage, which can amplify gains but also magnify losses.
- Liquidation Risk: If cryptocurrency prices fluctuate significantly, short sellers and long sellers may face liquidation risk, which is forced liquidation of positions to avoid larger losses.
Therefore, before engaging in short or long operations, be sure to understand the risks and operate with caution based on your own risk tolerance.
The above is the detailed content of How to operate short and long positions in the currency circle. For more information, please follow other related articles on the PHP Chinese website!
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