How to do short selling in the currency circle

Short selling is a financial operation that is performed when an asset price is expected to fall. In the cryptocurrency community, short selling involves borrowing a cryptocurrency, selling it, and buying it back when the price drops, earning a profit on the difference. The process involves choosing a platform that supports short selling, borrowing cryptocurrency, selling the borrowed cryptocurrency, paying back the borrowed cryptocurrency, and earning the difference. However, you need to pay attention to precautions such as liquidation, interest and market risks.

Short selling operation guide in the currency circle

Short selling definition

Short selling is a Financial operations performed when investors expect asset prices to fall. In the currency circle, short selling refers to borrowing a certain cryptocurrency and then selling it when the price drops, thereby earning a profit from the price difference.

Short selling operation method

1. Select a short selling platform

Select a cryptocurrency trading platform that supports short selling, such as Binance, Huobi or OKX.

2. Borrow Cryptocurrency

Borrow the cryptocurrency you want to short from other users on the selected platform and pay interest.

3. Sell the borrowed cryptocurrency

When the price of the cryptocurrency drops, sell the borrowed cryptocurrency and obtain fiat currency or other cryptocurrencies.

4. Repay Borrowed Cryptocurrency

Buy back the same amount of crypto you sold when cryptocurrency prices continue to fall or you believe the price has bottomed currency and is repaid to the borrower along with interest.

5. Earn the difference

If you sell the borrowed cryptocurrency for a lower price and buy it back for a higher price, you will earn Price difference income. This gain will offset the interest and other fees you pay.

Risks and Precautions

• Risk of liquidation:The value of the borrowed cryptocurrency you sell if the price of the cryptocurrency rises will be less than your borrowing limit. At this point, you will be forced to close your position and lose your initial margin or even more.
• Interest Cost:Borrowing cryptocurrency from other users will require you to pay interest, which will reduce your potential earnings.
• Platform Risk:It is important to choose a reputable trading platform to avoid asset loss or fraud.
• Market Volatility:The cryptocurrency market is highly volatile, which can cause prices to rise or fall significantly, affecting your short trades.

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