Long Trade vs Short Trade

When dealing with cryptocurrency, you might have come across the terms: long trade and short trade. In this blog, we’ll understand what they mean.

What is Long and Short Trade?

Long and short trades determine the direction in which the trader needs the price of the crypto to progress in order to earn a profit. In a long trade, the trader hopes the price of the crypto will increase. It is said that the trader “goes long” or purchases the crypto. In a short trade, the trader hopes the price of the crypto decreases. It is then said that the trader “goes short” or sells the crypto.

Through spot trading exchanges, you can buy or sell cryptocurrency by long or short trading. But through derivative trading exchanges, you can go long or short without having to own any cryptocurrency.

When should you go long?

When you expect the price of a cryptocurrency to go up, you should go long. You can form such a decision based on some technical analysis of the market. Your decision can be based on certain factors that seem promising, like when there’s a high-profile partnership for a blockchain project or an important upgrade is being rolled out or implemented, then going long might be a good option. You can analyze via charts and see if the price has increased even after a resistance line, then that might show an even further extension of the price.

When should you go short?

When you expect the price of a cryptocurrency to decline, you should go short. Deciding on a short trade also requires analysis. When the market has reached an overbought level such that the upstream has become over-saturated, then going short might seem like a sensible thing to do. If the price cannot break a resistance level and starts receding, then too going short might make sense.

Where can you go long or short?

Any cryptocurrency exchange platform providing spot or derivative trading services can be used for long or short trading. Also, the platforms where you do margin trading allow long and short trading.

Final Thoughts

You can go long or short based on whether you expect the price of the crypto to increase or decrease. Making an accurate decision requires a thorough analysis of the market and some experience.

At Kointrack, we make blockchain technology accessible to people and also provide information on the latest trends in the crypto market