Recently, there are still users inquiring about the basic question of what the principles of short selling and going long are. To this end, I specifically created this diagram to help everyone understand.
1. Bearish and Short Selling#
Bearish: Refers to the belief that the market will decline.
Short selling: Refers to the act of selling in anticipation of a market decline. In the spot market, direct short selling is not possible, but it can be achieved through futures or contract leveraged trading.
Short seller: Refers to an investor who, despite the current high price of a cryptocurrency, holds a pessimistic view of the future of the cryptocurrency market and expects the price to fall. Therefore, they sell the cryptocurrency they hold at the current price and plan to buy it back after the price drops, thus earning a profit from the price difference. This trading model of selling first and buying later is called short selling.
For example: Suppose a cryptocurrency is currently priced at ten yuan, and you predict that its future price will decline. However, you only have two or three yuan, which is not enough to buy one cryptocurrency. At this point, you can use the two yuan as collateral to a third party (such as an exchange) to borrow one cryptocurrency. After borrowing, you immediately sell it on the market for ten yuan in cash. This cash cannot be withdrawn directly because you have not yet returned the borrowed cryptocurrency.
When the price drops to five yuan as expected, you can use five yuan from the ten yuan cash to buy back one cryptocurrency and return it to the third party. After returning, the transaction ends, and the remaining five yuan is your profit (excluding interest). This is the process of making a profit from short selling.
However, if the price does not drop but instead rises, your collateral will face losses. If the losses exceed the collateral's capacity, a liquidation occurs, and you may lose all your principal.
2. Bullish and Going Long#
Bullish: Refers to the belief that the market will rise.
Going long: In the spot market, buying is considered going long. By buying at a low price and selling at a high price after the price rises, one earns a profit from the price difference, which is all part of going long.
Bullish investor: Refers to an investor who holds an optimistic view of the cryptocurrency market and expects the price to rise. They buy cryptocurrencies at the current price and sell them after the price rises, earning a profit from the price difference. This trading model of buying first and selling later is called going long.
For example: The current price of SOL is 140U. You are optimistic about this cryptocurrency and buy it at 140U. Later, when the price of SOL rises to 280U, you sell it and make a profit of 140U. This process is going long.
It should be noted that bulls and bears do not specifically refer to individuals or institutions but rather to a group of people holding similar market expectations.
The above is a detailed explanation of going long and short selling, as well as bulls and bears.
Summary: Going long refers to expecting the market to rise, earning a profit by buying low and selling high; short selling refers to expecting the market to decline, earning a profit by selling borrowed cryptocurrencies and buying them back at a lower price. Bulls represent bullish investors, while bears represent bearish investors, reflecting different market expectations.
@Uncomprehending sol Original
OKX Activities This Month#
New users registering on OKX this month can receive a blind box or Dogecoin gift package. Domestic users can register directly: Click here –> Go to the official website to register an OKX account, some regions may require a VPN or Alternative link
🔥 Solving the Issue of Inaccessibility to OKX Exchange in China#
Many exchanges' original domain names may be blacklisted, or access speed may be affected due to servers being located overseas. For ordinary users, this situation often leaves them feeling helpless, even doubting whether the issue lies with the exchange itself. In fact, this is more due to the network environment rather than a service interruption on the platform itself. To address this situation, exchanges like OKX and Binance typically update their backup domain names regularly to ensure users can continue to access the official website through alternative addresses.
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- OKX backup domain Overseas OKX - Requires VPN or Alternative link
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- Binance backup domain Binance
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- Bitget backup domain Bitget
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- Bybit backup domain Bybit/Bybitglobal
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- Huobi HTX backup domain Huobi/HTX
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- Gate.io backup domain Gate.io
🔥 Related Reading#
🔥 Useful Tools for Alpha Finding#
1️⃣ Axiom Dog Tool https://axiom.trade
2️⃣ Gmgn Dog Tool https://gmgn.ai
3️⃣ dbot Dog Tool https://app.debot.ai
4️⃣ Morelogin Multi-Account Fingerprint Browser www.morelogin.com
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