If you are a newbie in cryptocurrency, you might be confused with some crypto jargon commonly used in the crypto community. Among them, long and short are the most popular and also core concepts of digital trading. In this article, Tokenize Blog will explain cryptocurrency’s long and short positions in a nutshell!
1.Long position
Basically, a long position in the cryptocurrency market is opened when a trader or investor buys in with the expectation that the digital coin will go up in value. When you feel the price of a cryptocurrency is about to rise and hopes to make some profit, then you can go long (buy). You can buy the digital asset on a spot exchange or via futures, options, and other derivatives contracts.
But how do you know when cryptocurrency is going to increase? Obviously, you cannot just “feel”. Instead, you need some technical and market analysis. For example, after the Polygon Network was listed on MarkCubanWebsite, its digital coin – MATIC surged to $2 on May 26th, 2021. In this case, opening long positions right after the news was published would be profitable. Hence, you must be very active on social media and follow crypto newspapers like Coindesk, Cointelegraph to catch accurate market sentiment.
>>>Read more: What’s behind MATIC price surge<<<
2.Short position
The opposite of Long position is Short position that describes when the trader sells with the belief that the price will drop. Basically, traders go short (sell) when they expect the price of a digital coin to decline. Unlike traders who go long by buying low and sell high, short-sellers aspire to sell high and buy low. If the price plums as they forecast, the crypto traders will profit from the price difference between the short price and the long price.
Similar to a Long position, a Short position should come along with technical reasons and solid market analysis. Traders who postulate that a cryptocurrency price is overvalued or exists in a price bubble may predict a downward trend to start before selling their cryptocurrency.
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