Did you know you can make money when the market falls?
Below I will explain how you can do it and I will give you a series of tips to maximize your earnings.
The way of operating in the market is divided into 2 ways, Spot and futures.
Clarification: there is also the function of options, derivatives, among others, but we are not going to take them into account.
OPERATION SPOT:
This is the one we all know, it involves buying and selling an asset. Basically we buy when we think the price is cheap and we try to sell at a profit.
If prices fall, our capital decreases but the amount of assets remains the same. We are therefore subject to price fluctuations, with the safety belt that even if the price falls, our asset remains the same and may eventually rise.
FUTURES OPERATION:
In this way of trading we do not buy the asset directly, but rather a "contract" for it. In turn, we can trade with borrowed money, to multiply profits.
It is divided into two operations: Short and Long.
A short consists of selling "X" amount of money of an asset, for example BTC, to buy it back when it falls. The difference between both prices is our profit.
A Long is the other way around, we buy a certain amount and sell it when the price goes up.
Leverage is the money that the exchange lends us, let's take an example:
I have 100 USDT and I choose to leverage myself at 10X, I open a Long with those terms, then a contract is created. My position would be a buy for 1000 USDT, since I multiply 10 times.
WHY DO WE USE LEVERAGE? Because we can multiply the percentage of profits (also of losses). Turning a 10% movement into a 100% gain on our initial capital.
The risks:
By not having an asset, if the price goes in the opposite direction to your trade, the losses are multiplied. So if we are leveraged at 10X, a 10% movement liquidates our position, losing our capital.
Isolated and crossed: To create a futures contract we can choose between operating in isolation or crossed.
Isolated: a contract is created with a fixed capital. Only the money you put in is used.
Crossed: All the money in your account is available as collateral. Let's say you have $1,000 and you open a cross trade with $100, the remaining $900 is automatically used so that the trade is not liquidated if you have more than 100% losses.
Using stop loss: The stop loss is our safety belt. It is the price we set so that, if the asset goes in the opposite direction, the operation is closed, executing a minimum loss.
How do we win from the fall?
What everyone wants to know, How is it done?
The way is to open short, so that the fall generates profits. This can be done in almost any asset that is listed in #BinanceFutures
But as you have already read, this involves risks. If you make a wrong analysis, you can lose all the money in your account. So it is not a matter of opening operations foolishly, you must do so following a strategy.
In this post I shared some useful tips for trading futures:
Finally, if you open short positions, you must do so by carrying out some type of analysis and following a strategy, both in terms of operation and risk management (in my profile you have two strategies for beginners using basic indicators to have a base).
May you have excellent earnings and may everything be a learning experience.
Crypto Citizen says goodbye, good start to the week. Follow me to stay up to date with news and analysis to take advantage of every movement.
