Beginner Guide to Long and Short in Futures Trading

bitgetcn (35)in #binanceapp • last month

1. Bearish Outlook & Short Selling

Bearish outlook: You anticipate the market will decline.
Short selling: Selling assets you've borrowed, expecting prices to fall. While unavailable in spot markets, it's accessible via futures or margin trading.

Short position: Investors deem current prices overvalued and predict a downturn. They sell borrowed assets at today's price, aiming to repurchase them later at a lower cost—profiting from the difference.

Example: A coin trades at $10. You predict a drop but only hold $2–$3—insufficient to buy one.
Use $2 as collateral to borrow a coin, then sell it immediately for $10. You cannot access these funds yet, as the coin must be repaid.

If the price falls to $5, spend $5 to buy back the coin and return it to the lender (e.g., an exchange). Your profit is the remaining $5 (minus interest). This is short-selling profit.

However, if prices rise instead, your collateral faces losses. Exceeding your margin triggers liquidation, risking total capital loss.

2. Bullish Outlook & Going Long

Bullish outlook: You expect the market to climb.
Going long: In spot markets, buying an asset outright constitutes going long—buying low to sell high.

Long position: Optimistic investors purchase assets now, anticipating price appreciation. Selling later at higher prices yields profit.

Example: SOL is priced at $140. You buy, expecting growth. When SOL hits $280, you sell, earning $140 profit. This is going long.

Note: "Long" and "short" describe market stance groups, not individuals.

Reference summary:

Summary

Going Long: Bet on rising prices. Buy low → sell high.
Short Selling: Bet on falling prices. Borrow/sell high → buy back low → repay → profit.
Bulls: Optimistic investors.
Bears: Pessimistic investors.

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