What is a Long or Short position?
When you invest in crypto, you often come across some complicated investment terms. When you buy cryptocurrency, you invest money the same way as when you buy a stock. Just like the price of a stock, a crypto also has a value. This way you can make money by selling your crypto coins when the value has increased. When you buy cryptocurrency and expect the price to rise you call it going long.
Going long with cryptocurrency
Brokers ensure that cryptocurrency becomes available to everyone. That’s great, because that way everyone can easily invest in Bitcoin, Ripple, Ethereum or maybe one of the many altcoins. When you buy Bitcoin from a broker you always choose to go long. You buy some cryptocurrency in the hope that its value will increase at a later time. Then you can sell your cryptocurrency and make a profit. So, going long is the most common way to invest in the cryptocurrency market. This is therefore the way for most people to invest.
The opposite of going long is to go short
If you see the term going long, chances are you’ve heard of going short. Going short is exactly the opposite of going long. When going short, you actually expect that the price of a coin is going to drop. You wouldn’t expect it, but also with going short, you are be able to make a profit.
Going short with cryptocurrency
You heard it right, you can make money while the price of a coin is falling. Within the investment world you call this going short. When going short, an investor borrows coins of which he or she expects that the price is going to drop. The investor sells the borrowed crypto on the market and then waits until the price of the crypto drops even further. When the price has dropped to the desired value, the investor buys back the same amount of crypto and returns it to the exchange. Because the investor has sold the crypto coins at a high price and bought them back at a low price, he makes a profit on the difference.
This process is automatically facilitated via different platforms. There you can go long or short with one push on the button.
Where can you go long or short?
There are several exchanges where you can go long or short and can anticipate a rising or falling trend. Most of the platforms where you can do margin trading, you’ll also be able to go long or short. Here are a few examples:
Going long or short is risky
Going short is risky. It is possible that the price of a crypto coin suddenly rises after the investor just sold the coins, hoping to buy them back at a lower price later. At that moment, the investor would have been better off going long, because now he is making a loss by buying back the coins at a higher price. The same goes for going long while the prices are falling.