by Hodler Ash 
What Does Going Short Mean In Crypto Trading ?
Trading with cryptocurrency is not as easy as it seems like because a lot of things are supposed to be kept in mind before starting off with the market. In fact, there are so many different terms that are used by the traders which will be understood by the people who have been associated with the crypto market for a while. “ Going short ” is one of those phrases.
What it basically states is a position where the crypto market is supposed to be going down according to the predictors and the analysts which is the reason why you do not bet on any asset at that point of time. Not only bet, but also many traders even sell their coins just in order to avoid losses.
Again, going short is not necessarily done for avoiding losses but it’s done when people think that a temporary decrease in the advantage take place and they would not want to take the risk. In fact, the latter one has more frequency and people are more likely to sell assets in that situation.
There are two basic aspects of short positions:
- selling now
- buying later
If a trader has an asset which he/she thought holds a lot of potential but did not quite do well in the market and is supposedly going to fall down in the upcoming days, he/she sells it then and there just in order to minimise losses.
If a trader does not have an asset and he has been planning to buy one, the short position will actually repel him from buying since the potential fall in price would be visible in that period. Nobody would want to risk money this way perfectly when the short position is more likely to change in the near future.
What Is The Duration For Going Short ?
Going short and going long are two very predictable things because its never what it looks like. One can actually go long for even just a day and the same person can hold a short forever. The basic idea of investing in cryptocurrency is to have more coins than what you had initially. This is what everybody is wanting to get out of the market but definitely going short can last for a long time if the faith of the person in the market trend last for long.
There are many traders who are mainly specialised in long-term trading and they should know that there are different kinds of tax consequences that are attached to the process of going short. Any win in the crypto market would actually demand taxes and any trader should be aware of it.
Example Of Going Short
The doubts about earning via going short is huge and that is the reason why here is an example for you to understand in a better way. If a cryptocurrency is actually facing a major decline, you can go short with it and buy some coins and sell it immediately. After the selling of the coins, the market would automatically begin to decline even more which will reduce the price of that specific cryptocurrency. The money the trader has at this point of time is enough for him to buy back more Bitcoins than he initially did and exchange them while still taking a profit. This is as simple as it could get.
When Is The Right Time For Going Short?
When you really believe that the market is going to make that cryptocurrency fall down in value, that is exactly when a trader should go short after analysing and identifying a lot of other things as well. If the news and the trends basically show that the market price will only rise and not fall thereafter, a trader should not take the risk of going short because otherwise he/she could actually earn more money. A trader who is opting for shorting should only go for it when he/she believes that the present worth at that time is higher than the actual worth of the asset.
Also Read
What Is The Meaning Of Crypto Bull Run ? When Is The Next Bull Run ?
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