Seeing the market going bad is totally frustrating for any crypto trader—or anyone with any crypto asset holdings. However, those who are passionate about trading don’t have to despair. It is still possible to turn your fortune around—but you have to be bold enough to take advantage of the red market.
What Are Long and Short Positions?
Firstly, understanding the market goes a long way towards making the right and valid choices. Although it’s often used to refer to complex trading procedures, it does not have to be too complicated itself. The terms we’re referring to are long and short positions, of course.
A long position means you have bought certain assets that you now own. A short position means you owe the assets to someone but don’t own them yet. You probably already know about long positions being inherently bullish in nature—this is because you already own those assets, they’re fully paid for, so to profit off them, you’re hoping the price will rise.
On the other hand, if you’re selling assets but you don’t own them (ie. shorting), the situation is slightly more complicated than that. You will first have to buy those assets: one of the most common ways is by using a margin account, where you’re basically borrowing. Then, when you have to pay it back, you hope that the price will fall so the difference between the two purchases is your profit. This is why a short position is considered bearish.
We’ve mentioned another term that we haven’t explained here: a margin account. By definition, “a margin account is a brokerage account in which the broker lends the customer cash to purchase stocks or other financial products,” Investopedia explains. There is usually a collateral that depends on the brokerage, as well as an interest rate.
As you’re investing with more funds than you otherwise would, margin trading can earn you much higher profits, even when you pay back the borrowed funds. However, the same is true if you lose: you will lose both your own funds and the borrowed ones, plus you will owe a certain amount of interest on top of that.
This is why margin trading is extremely risky and should be approached with the utmost caution. Add to that the inherent volatility of the cryptocurrency market, and the situation gets quite complicated. But also, as we mentioned, this is an opportunity for a savvy investor to profit even when the markets are turning red.
How Can I Get Started?
So you have done your research and decided that you can take the risk of margin trading. The first step is choosing a reputable trading platform: PrimeXBT offers access to more than just cryptocurrencies with leverage of up to 100x, making it an excellent place to trade. You will need to open an account—which is easy, as long as you have a valid email address, as you will not need to provide any other personal data.
After that, fund your account with either crypto or fiat of choice and read up on the long and short examples on their website! As for trading itself, PrimeXBT is very straightforward. There are several places from which you can place your order (each of which is marked with Trade), and all you need to do is fill in the details in the New Order window. You can modify your order later if needed.
Ready to seize your opportunity? Then follow this link to sign up with PrimeXBT!