There are basic terms that confuse anyone who steps into the cryptocurrency industry. What are the most frequently asked shot positions and long positions in this article? Especially in Bitcoin, “What are short positions and long positions?” Our article will be a guide for those who want to learn these strategies. These two terms reflect the investor’s belief that the value of the cryptocurrency will rise or fall.
Long Position
The ‘long position’, actually indicates a direction according to which a value will gain value upwards. The purpose of this move is to get the value you think will be valued in the future. It often connotes long-term investments.
You may be interested in going long when you feel that the price of a cryptocurrency is about to rise for a while depending on the timeframe you are operating in. For example, if you are trading on the daily chart and you believe the price will increase in the following days or even weeks, you can go long. Especially when it comes to Bitcoin, you will see many investors choosing to stick with the “buy and hold” strategy.
As an example, let’s say you bought BTC for $10. You bought yourself a long (bitcoin long) position. You expect BTC to be $12 after a certain period of time. If your expectation has come true, if you close your position at that time, you will make a profit. But if the price of BTC drops to $8 and you still haven’t closed your position, even if you don’t make a profit, you don’t make a loss. The reason why it is called long-term is that you have a time and a chance to wait and you can wait for BTC to reach the level you want in this position.
Short Position
The ‘short position’, actually describes the downward trend of any investment made, that is, it is also called pricing so that its value will decrease. In short, if you think that any value you have will lose in price and you make a sale, you are putting yourself in a short position.
As explained above, you should support your decision with sound market analysis. As a rule, short sellers open their positions when the market reaches the overbought level, i.e. it has gone up for a long time and the uptrend may be oversaturated. It also makes sense to go short when price fails to break a resistance level and starts to break out of it.
In fact, it means that you are borrowing in crypto money that you open a short position. In other words, you will make a profit when you borrow in the crypto money that you think will fall and close it in the future when the value drops. Today you borrowed 1 BTC when it was worth $30.000. You have 1 BTC and 1 BTC in debt.
Then you sold this 1 BTC from the market. You have $30.000 and 1 BTC debt. When the market drops to $28.000, you buy 1 BTC with $28.000 of your $30.000 and when you close your debt, you will not have $2.000 debt. This creates the logic of the short position. Of course, we tried to explain in a simple way that there is a guarantee you give here and without taking into account the effects such as value change.
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