Today, a friend surprisingly asked me this basic question—what is the principle of shorting and going long? I specially created this image to help everyone understand.
1. Bearish and Short Selling#
Bearish: Refers to the belief that the market will decline.
Short selling: Is the act of selling based on a bearish expectation. In the spot market, you cannot short sell directly, but you can achieve this through futures or contract leverage trading.
Short seller: Refers to an investor who, despite the current high price of a cryptocurrency, holds a pessimistic view of the future of the crypto market, expecting the price to fall. Therefore, they sell the cryptocurrency they hold at the current price and buy it back after the price drops, thus earning a profit from the price difference. This operation of selling first and buying later is the strategy of short selling.
For example: Suppose a cryptocurrency is currently priced at ten yuan, and you predict that its future price will drop. However, you only have two or three yuan, which is not enough to buy one cryptocurrency. At this point, you can use this two yuan as collateral to borrow one cryptocurrency from a third party (such as an exchange). After borrowing the cryptocurrency, you immediately sell it on the market for ten yuan, obtaining ten yuan in cash. However, this ten yuan cannot be withdrawn directly because you have not yet returned the borrowed cryptocurrency.
When the price drops to five yuan as expected, you use five yuan from the ten yuan cash to buy back one cryptocurrency and return it to the third party. After paying it back, the remaining five yuan is your profit (excluding interest). This is the process of making a profit from short selling.
However, if the price does not drop but instead rises, you will lose your collateral. If the loss exceeds the collateral's capacity, a liquidation will occur, and you may lose all your principal.
2. Bullish and Going Long#
Bullish: Refers to the expectation that the market will rise.
Going long: In the spot market, buying is considered going long. By buying at a low price and waiting to sell at a higher price after the price rises, earning a profit from the price difference, all fall under going long.
Bull: Refers to investors who are optimistic about the prospects of the cryptocurrency market, believing that the price will rise. Therefore, they buy cryptocurrencies at the current price and sell them after the price increases to earn a profit from the price difference. This operation of buying first and selling later is the strategy of going long.
For example: The current price of SOL is 140U. You are optimistic about this cryptocurrency, so you spend 140U to buy it. Later, when the price of SOL rises to 280U, you sell it and earn a profit of 140U. This process is going long.
In fact, bulls and bears do not refer to specific individuals or institutions but rather to a group of people holding similar market expectations.
The above is a detailed explanation of going long and short selling, as well as bulls and bears.
In summary: "Going long" refers to being optimistic about the market rising, buying low and selling high to earn a profit; "short selling" refers to being bearish on the market, borrowing to sell and then buying back after the price drops to return the borrowed cryptocurrency, earning a profit from the price difference. Bulls represent bullish investors, while bears represent bearish investors. The two reflect different market expectations.
@Uncomprehending sol Original
OKX Activities This Month#
New users registering on OKX this month can receive a blind box or Dogecoin gift package. Domestic users can register directly: Click here–>Go to the official website to register an OKX account, some regions may require a VPN or alternative link
🔥 Solving the Issue of Inaccessibility to OKX Exchange in China#
Many exchanges' original domain names may be blacklisted, or access speed may be affected due to servers being located overseas. For ordinary users, this situation often leaves them feeling helpless, even doubting whether the exchange itself has issues. In fact, this is more due to the network environment rather than a service interruption of the platform itself. To address this situation, exchanges like OKX and Binance usually update their backup domain names regularly to ensure users can continue to access the official website through alternative addresses.
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- OKX backup domain Overseas OKX - requires VPN or alternative link
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- Binance backup domain Binance
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- Bitget backup domain Bitget
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- Bybit backup domain Bybit/Bybitglobal
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- Huobi HTX backup domain Huobi/HTX
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- Gate backup domain Gate.io
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🔥 Useful Tools for Finding Gold Dogs#
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4️⃣ Morelogin Multi-Account Fingerprint Browser www.morelogin.com
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