Any crypto trader, or anyone who has any crypto assets, can find it extremely stressful to watch the market plummet. But traders who are serious about trading need not despair. You can still turn your fortune around, but you must be able to use the red market to your advantage. A little bit of foresight and trading knowledge are necessary.
What are the Long and Short Positions of a Job?
The terminology is important. Understanding the jargon will help you make informed decisions. It is often used to describe complex trading procedures but it doesn’t have to be complicated. We are referring to both long and short positions.
A long position means that you have purchased certain assets you now own. A short situation is when you owe assets to someone, but don’t yet own them. Long positions are inherently bullish, as you probably know. This is because you own the assets and have paid for them. To profit from them, you hope that the price will increase.
However, you can sell assets that you don’t have (ie. The situation for shorting is slightly more complex. First, you will need to purchase those assets. One of the most popular ways is to use a margin account. This basically means that you are borrowing money. You then hope that the price of the assets will drop so that your profit is the difference between them. A short position is therefore considered bearish.
Another term we’ve not explained is the margin account. Investopedia explains that a margin account is a brokerage account where the broker lends money to customers to buy stocks or other financial products. The brokerage will usually provide collateral and an interest rate.
Margin trading is a way to make more money than you would otherwise by investing with more funds. Even if you repay the borrowed funds, you can still earn higher profits. The same applies if you lose. You will lose both your funds and the borrowed funds, and you will also owe interest.
Margin trading is extremely risky, and should be avoided. The situation becomes even more complicated when you consider the volatility inherent in the cryptocurrency market. This is a great opportunity for smart investors to make a profit even when markets turn red.