Income from short and long positions in currency speculation

There are differences in returns between short selling and long selling in the cryptocurrency market: going long can lead to unlimited rises, and going short can also lead to unlimited rises. Transaction costs include borrowing costs, handling fees and interest costs. Risk management measures include: setting stop loss orders, moderate use of leverage and risk diversification.

The benefits of shorting and longing in currency speculation

In the cryptocurrency market, shorting and longing are two completely different things There are also significant differences in returns among trading strategies.

Going long

Going long means buying the cryptocurrency in anticipation that its price will rise. If predictions are correct, investors can make profits when cryptocurrency prices rise. The profit from going long depends on how much the price of the cryptocurrency rises.

Short selling

Short selling refers to borrowing and selling the cryptocurrency in anticipation that the price of the cryptocurrency will fall. If the prediction is correct, when cryptocurrency prices fall, investors can buy back the borrowed cryptocurrency and repay the borrowing costs, thereby making a profit. The profit from shorting depends on how much the price of the cryptocurrency falls.

Profit comparison

There is a difference in the profit potential of going long and short:

• Going long:If crypto As currency prices rise, the gains may be unlimited.
• Short selling: If the price of cryptocurrency falls, the gains may also be unlimited.

It is important to note that short selling also carries the risk of loss, as cryptocurrency prices can also rise. The loss potential of a short sale depends on how much the cryptocurrency price rises.

Transaction Costs

When conducting short and long transactions, transaction costs need to be considered, including:

• Borrowing costs : For short trades, you need to pay the interest rate on borrowed cryptocurrency.
• Handling fee: When buying and selling cryptocurrency on the trading platform, a handling fee will be incurred.
• Interest Cost: For short selling, investors need to pay additional interest costs if the cryptocurrency price increases.

Risk Management

Both short and long transactions involve risks, so effective risk management measures need to be taken, such as:

• Stop Loss Order: Set a stop loss order to limit potential losses.
• Moderate leverage: Using leverage can magnify returns, but it can also magnify risks.
• Risk Diversification: Invest in multiple cryptocurrencies to spread your risk.

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