Explanation of long positions and short positions in cryptocurrency

As someone who has stepped into the world of virtual currency trading, I want to talk about the most important concept I feel: “longs and Shorts.” To survive in this market that never sleeps, it is essential to understand these basic strategies.

The market is always in motion. The collapse of FTX, the emergence of spot ETFs, politicians' statements, the frenzy of meme coins—all of these lead to price volatility. To profit in this chaos, not only market knowledge is required, but also the ability to discern the technical value of each coin.

A long position is the most basic strategy of buying coins in anticipation of a price increase. For example, if you buy BTC at $60,000 and sell it at $65,000, you will make a profit. It's simple, but there is always the risk of a price decline.

On the other hand, short positions are more complex. You “borrow” the coin and sell it at the current price, then buy it back cheaply after the price drops and return it. If you short BTC at $60,000 and it drops to $55,000, the profit will be the difference of $5,000. However, if the price rises contrary to expectations, there is a risk of significant losses.

Theoretically, the profits from longs are infinite, while the profits from shorts are capped at the point where the coin price reaches zero. Both can be considered double-edged swords.

To actually trade, the first step is to choose a reliable exchange. Proceed with account setup, fund deposits, and then placing orders. A platform that supports margin trading is especially necessary for Shorts.

Using leverage allows you to take a large position with a small amount, but the risks also increase proportionally. If you borrow $5,000 with $2,000 of your own funds to short BTC, a price drop will yield significant profits, but a price increase will result in a painful loss.

Experienced traders employ various strategies. Leverage, futures trading, hedging, options - these are all tools that should be used according to the situation. Particularly in high volatility assets like meme coins, careful strategy selection is required.

Finally, one must not forget risk management. In longs, one must always be prepared for price declines, and in shorts, for price increases. It is especially important to keep in mind that in theory, shorts can lead to infinite losses.

This market is not sweet. I am deeply aware that the key to survival is to invest only an amount of money that you can afford to lose and to never neglect thorough research.