Bitcoin Long Short Concept
Bitcoin long short refers to a position for coin futures trading orders. Simply put, the difference between coin long and short is about ‘whether the market price will fall or rise in the future’, and the difference lies in entering either a long or short position.
A long position is a position where you enter with the direction that ‘the coin price will rise in the future’. After buying a long position in Bitcoin, if the coin price rises, it results in a profit, and if it falls, it results in a loss.
In short, it’s a position with the same profit and loss as the spot position of Spot Exchanges.
- Typically, it’s used in a strong bull market situation, or you can set up a strategy to take short, quick profits when the market price rises in a 3 to 10 minute candle.
Unlike a long position, a Bitcoin short position is a position where you enter with the direction that ‘the coin price will fall in the future’.
While a long position profits when the price rises, a short position profits only when the price falls. Likewise, if the price rises, it results in a loss.
Most futures exchanges display it as Buy long or Sell short, but simply know that the left side is for entering a long position, and the right button is for entering a short position.
Advantages of Bitcoin Long Short
Having understood the meaning of long and short positions, I believe you have a perfect understanding now. Next, let’s look at the advantages that exist because of the presence of long and short positions.
Profit Expectations from Coin Short in a Bear Market
Typically, in spot trading, profit can only be made when the coin price rises, and the same goes for short-term or long-term investments in coins. The downside is that a consistent profit is only made when a bull market occurs.
Coin short has the advantage of offering opportunities for profit from various perspectives in a major bear market, sharply falling market, or short or long bear phases. Therefore, it might be better to use Bitcoin long short instead of spot in such seasons.
When you visit a coin community during a bear market, you can see posts and news where spot traders envy futures traders or regret not participating.
Leveraging the Leverage of Bitcoin Long Short Exchanges
Bitcoin Leverage is a unique system exclusive to coin derivatives, allowing you to inflate your investment capital by several times to as much as ten times, even up to 200 times, enabling you to invest more heavily.
Simply put, if you set 100 times leverage on 1 million won, it means you can make a profit of 100 million won. (A 1% rise in coin price equals a profit of 1 million won)
If it results in profit, it’s like a dream come true, but it’s also a double-edged sword with a high possibility of losing your investment.
Similarly, you can set long and short positions in coins, and devise strategies to sell at target prices.
Developing a Habit of Looking at Things from Various Perspectives
In spot trading, you only need to be cautious about risks like ‘delisting’, ‘bear markets’, ‘good or bad news for coins’, etc., but futures trading requires attention to various factors like coin futures liquidation (a system where your investment is completely wiped out if it approaches a certain price), sudden market volatility, and chart analysis. Hence, starting with Bitcoin long short trading, you tend to develop the habit of approaching from various perspectives compared to spot trading.
While in spot trading, you can lower the average purchase price through ‘holding on’ or ‘averaging down’ when you’re at a loss, futures trading doesn’t work that way, leading to more cautious entry, quick decision-making for stop-loss, and various perspectives, thoughts, and predictions.
Above All, the Best Thing is ‘High Profits from Coin Long Short’
The decisive reason for trading futures is the possibility of high returns with a small capital. For instance, if you invest 1 million won in a spot coin and it earns 10%, you only make 100,000 won.
In contrast, futures trading, as mentioned before, allows for a profit of 1 million won on a 10% return with 1 million won plus 10 times leverage, making it an easy system to be tempted by high profits on a small capital.
The Devilish Disadvantages of Bitcoin Long Short
While Bitcoin long short positions have various advantages, there are also several worst-case disadvantages. It’s a trading system that comes with risks as much as it offers high profits, so you must decide carefully whether to start or not.
If it goes well, you could quickly buy a luxury car or property in your name, but if it goes wrong, you could end up in debt or face various difficult situations.
The Temptation of Gambling
Those who are good at self-control may not easily fall into temptation. However, if you’re not good at controlling yourself or have easily succumbed to gambling temptations like sports betting before, there’s a very high likelihood of falling into the temptation of gambling with futures trading.
The Temptation of Loans
There are cases where people apply for loans to hit it big in one shot or to recover lost principal. It’s akin to the logic of taking loans to gamble after losing the principal in sports betting.
Maximizing Loss Rate
As much as the profit rate is high, the loss rate is equally significant. It’s a structure where you can lose money as easily as you earn it, making it a risky trading method.
Becoming Mentally Exhausted
Continuously watching the rapid rise or fall of profit and loss rates can be mentally exhausting.
If you’re making a profit, you might feel good, but if not, it can be very tough.
How to Do Coin Long Short
The method of doing Bitcoin long short is not available in domestic exchanges due to the domestic Special Financial Law, and can only be used in overseas futures exchanges. You must choose a trustworthy place to use it safely without asset risk.
A place recommended by a leisurely person’s coin blog is the Bitget exchange. Bitget boasts the best UI/UX for futures trading, and all operations, functions, and button placements are very simply organized, making it the easiest to start with.
The Flow of How to Do Bitcoin Long Short
- Refer to Bitget’s registration and KYC verification method to complete your membership registration.
- Refer to the method of trading coin futures to complete deposits and withdrawals from domestic exchanges to Bitget and familiarize yourself with futures trading methods.
- Studying Bitcoin charts and types of patterns can be very helpful. Additionally, referring to the coin futures trading terms mentioned above will allow you to understand all the content used in futures trading. You can also find a variety of information on the TradingView community site.
The most important thing thereafter is to manage your position risk so that the margin ratio does not reach 100%, and to organize your positions according to the targeted ROI. Missing the timing due to greed can lead to losses.
What is the best exchange for coin long short trading?
Personally, I would most recommend Bitget for futures trading. This is because it allows for optimized coin long short trading through two types of fast order modes.
I’ve heard long short referred to as buying long and selling short, which is correct?
In the stock market, it’s expressed as buying long and selling short, but in the Bitcoin world, it’s called long short, and the former terms are not commonly used.
Is there a difference in fees between long and short?
Fees are not based on whether it’s a long or short position, but are determined by the leverage and the method of execution. The fees are the same whether you go long or short.