Today, some friends have inquired about basic questions: What are the core principles of short selling and going long? Therefore, I have created a diagram to help everyone understand.
1. Short Selling and Short Mechanism#
Short Selling: Anticipating that market prices will decline
Short: Selling behavior based on a bearish judgment (short selling cannot be done directly in the spot market, it must be achieved through futures/contracts)
Analysis of Short Operations
When investors believe that the current coin price is overvalued and anticipate a future decline, they adopt a "sell first, buy later" strategy:
- Mortgage margin to borrow tokens (e.g., mortgage 2 yuan to borrow 1 token worth 10 yuan)
- Immediately sell the borrowed token at the market price of 10 yuan
- Wait for the coin price to drop to 5 yuan, then buy back the token for 5 yuan to return
- Net profit of 5 yuan difference (interest on the loan must be deducted)
⚠️ Risk Warning: If the coin price rises in the opposite direction, the margin may be forcibly liquidated (liquidation), resulting in a total loss of principal.
2. Bullish and Long Strategies#
Bullish: Predicting that market prices will rise
Long: Trading behavior that profits through "buy low, sell high" (the main profit method in the spot market)
Example of Bullish Operations
Taking SOL as an example:
- Buy and hold when the current price is 140U
- Sell when the price rises to 280U
- Achieve a profit of 140U price difference
📌 Key Points:
- Bulls/Bears represent the expected direction of market participants
- The two constitute the basic logic of the market's two-way game
Core Summary Table#
| Concept | Operation Logic | Profit Condition | Typical Scenario |
|---|---|---|---|
| Long | Buy first, sell later | Price rises | Spot buying |
| Short | Sell first, buy later (borrowing tokens) | Price falls | Contract trading |
@Cannot understand SOL original
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2025 Top Ten Digital Currency Exchanges in China - Authoritative Ranking
The Roller Coaster of Wealth in the Coin Circle: A True Experience from Millions in Profit to Hundreds of Thousands in Debt
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