In fact, this is a false proposition.
Because in most people's perception, if you go long, you will earn more, and if you go short, you will earn fast. It is obvious that the market or sector is not good, and the trend is a downward trend. Why not go short and make some profits? Or it could mean that it is a bear market, and if we don’t go short, how can we make any profit?
In fact, this is often a misunderstanding. Of course, all of this is based on personal trading understanding.
Question 1: Will I be short?
Answer: Yes, definitely yes, but I prefer to go long.
Question 2: Will leverage be used for short selling?
Answer: Yes, no matter how you do it, you will use leverage, even if you borrow money.
However, from the perspective of strategy classification, it can be divided into long strategy and short strategy. Of course, there is also a special strategy called neutral strategy.
As the name suggests, long is only long.
Same goes for shorts, only shorts.
Neutral actually has both long and short positions, being an alpha and hedging risks.
In the long run, going long and going short are equivalent. To close a long position is to backhand.
For contracts, short selling is an ability, an innate ability. You can choose to use it, or you can choose not to use it.
For most Crypto, the top is the high point. In fact, short selling has become a good way to make profits, but it is difficult and few people can control this operating mode.
The first point is the issue of cost and possibility. For most people, unless short-selling is achieved through contracts and borrowed currency, it is rare for an online company to hold a large number of tokens in their hands. This creates no short-selling opportunities, even if they are listed. Contracts are also harvesters, and the handicap fight and bilateral liquidation are also elusive. In my opinion, this is not a state that a trader should endure. It is not natural enough. Trading should be a state that goes with the flow. This resulted in most people dying before dawn.
Otherwise, you wouldn’t click in to read this article, or at least wouldn’t bother to listen to my bb.
So what is the meaning of short selling?
In my opinion, short selling is a means to avoid asset depreciation and a long-term hedging tool. No matter when and where, the rise and fall are elusive, at least not easy to guess. So how do we avoid the depreciation of the assets in our hands? Avoid by going short.
Of course, sometimes it is also a tool for us to make profits.
For institutions, short selling is mostly a hedging tool and not a means of profit. Unless they have specific short-selling intentions or malicious short-selling behavior, they rarely have the habit of short-selling. Because compared to short-selling profits, most of the time they hope that the assets in their hands can be in a state of long-term appreciation. Shorting gives them the risk of preventing the asset from losing value.
In terms of income, most of what we can see is how many times, dozens, or hundreds of times a certain token has earned, and we can clearly see how many times it has earned from short selling, because you can only make a profit from 1 to 0. to 100%, but that's not going to happen. If you want to transfer more than 100%, you need to increase the leverage. In comparison, going long carries lower risks. Better control. You have more choices. And you can use short selling to avoid the risk and loss of falling prices. Of course, there are some special cases here, namely black swans and unexpected events of high-risk assets. In my opinion, these are like buying lottery tickets, and the possibility of choosing you is relatively small.
Most of the time, holding spot carries the lowest risk from an asset growth perspective.
Then many people will ask, when to buy? What to buy? There is no way to answer this. My understanding is what to buy, not when to buy. The price doesn’t matter when you buy, what matters is what you buy. This requires a lot of analysis and research to support your purchasing behavior.
When to buy is not the point. The point is how you deal with it after you buy it. How do you deal with it when it falls? How do you deal with it when it rises? This is knowledge, and it also requires you to have a deep understanding of various financial instruments.