What does long and short digital currency contracts mean?

In digital currency contract trading, going long means bullish and believes the price will rise; shorting means bearish and believes the price will fall. Long traders buy a contract in the hope of making a profit if it goes up; short traders sell a contract in the hope of making a profit if it goes down. These strategies help with price discovery, increase market liquidity, and hedge risks. It should be noted that digital currency contract transactions have high leverage and risks need to be carefully assessed.

Digital currency contract long and short

What are long and short?

In digital currency contract trading, long and short refer to two opposite trading strategies. Going long means bullish, that is, believing that the price of the underlying digital currency will rise, while going short means being bearish, that is, believing that the price will fall.

Go Long (Call)

• Trading Operation: Buy a contract and expect the price to increase.
• Source of profit: When the contract price is higher than the buying price, investors can make a profit.
• Risk: If the contract price is lower than the buying price, investors will lose money.

Short (Put)

• Trading Operation: Sell a contract and expect the price to fall.
• Source of profit: When the contract price is lower than the selling price, investors can make profits.
• Risk: If the contract price is higher than the selling price, investors will lose money.

The meaning of long and short

The long and short strategies have the following important meanings for the digital currency market:

• Price discovery: By going long or short, traders can predict the future price of digital currencies To play games, thereby affecting market prices.
• Market Liquidity: Long and short trading increases the liquidity of the market, allowing traders to buy and sell digital currencies more easily.
• Risk Hedging: Investors can hedge the risks of digital currencies they hold by shorting to prevent losses caused by price drops.

Notes

• Digital currency contract trading has high leverage and therefore extremely high risks.
• Investors should fully understand market dynamics and trading rules before conducting long or short transactions.
• It is recommended to practice on the simulated trading platform before conducting real trading.

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