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A Beginner's Guide to Long and Short Positions in Contracts

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The document explains the core principles of short selling (做空) and long buying (做多) in financial markets. ### Short Selling - **Definition**: Anticipating a decline in market prices. - **Mechanism**: Involves borrowing assets (e.g., BTC) to sell at current prices and repurchasing them later at a lower price. - **Example**: Borrowing 1 TokenX at a price of 10U, selling it for cash, and repurchasing it at 5U after the price drops, resulting in profit after interest. **Risk**: If prices rise instead of fall, there is a risk of forced liquidation. ### Long Buying - **Definition**: Expecting an increase in market prices. - **Mechanism**: Buying assets at a low price and selling them at a higher price for profit. - **Example**: Buying SOL at 140U and selling it at 280U for a 100% return (excluding transaction costs). ### Summary Table | Operation Type | Market Expectation | Trading Logic | Profit Source | |----------------|--------------------|-------------------|------------------| | Long Buying | Bullish | Buy low, sell high| Positive price difference | | Short Selling | Bearish | Sell high, buy low (borrow and return) | Negative price difference | The document also includes promotional offers for new users and suggests further reading on cryptocurrency trading platforms and strategies.

Today, friends still consult basic financial concepts, so here is a diagram explaining the core principles of short selling and going long.

1. Short Selling Mechanism and Operations#

Definition of Short Selling: Anticipating that market prices will decline
Essence of Short Selling: Active short selling behavior based on bearish judgment (requires the use of derivatives such as futures/contracts)

Analysis of Short Strategies
When investors determine that the current inflated coin price has room to drop, they adopt a reverse operation of "sell first - buy back later":

  1. Borrow the underlying asset (such as BTC) by mortgaging margin
  2. Immediately sell at market price to lock in the current price
  3. After the coin price drops, buy back at a lower price to return
  4. The difference minus interest is the net profit

Practical Case Demonstration
TokenX at a current price of 10U, operation process:
① Mortgage 2U margin to borrow 1 TokenX
② Immediately sell to obtain 10U cash (funds frozen)
③ When the coin price drops to 5U:

  • Use 5U to buy back 1 TokenX to return
  • Unfreeze the remaining 5U (net profit after deducting interest)

⚠️ Risk Warning: If the coin price rises against expectations, the margin will face forced liquidation risk.

2. Bullish Logic and Long Strategies#

Definition of Going Long: Expecting that market prices will rise
Essence of Going Long: Obtaining upward profits through spot purchases or leveraged long positions

Breakdown of Long Strategies
Investors implement "build position first - profit later" operations based on bullish judgment:

  1. Purchase the target asset at the current price
  2. Hold the coins until the price rises to the target level
  3. Sell at a high price to realize capital appreciation

Practical Case Explanation
Taking SOL as an example:

  • Entry price: 140U each
  • Target price: 280U each
  • Return rate: 100% (excluding transaction costs)

💡 Market Consensus: Both long and short sides represent different investor groups with varying market expectations.

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Summary of Key Points#

Operation TypeMarket ExpectationTrading LogicSource of Profit
Going LongBullishBuy low, sell highPositive price difference
Short SellingBearishSell high, buy low (borrow and return)Negative price difference

@Uncomprehending sol Original

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Recommended Further Reading#

🔥2025 China's Top Ten Digital Asset Trading Platforms Authority List
From Debt to Millions: The True Wealth Legend in the Crypto World

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NFT Wallet Configuration | Leverage Trading Risk Control | Liquidation Response Plan

Data Source: btc8848.com & heiyetouzi.xyz

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