The concept of long and short is simple and easy to understand. The basic principle behind long and short trading is necessary for every trader. Long and short positions are the two potential price directions that are required to ensure a good profit.
Traders who go long in the market expect the price of the currency to rise from a certain point. On the other hand, traders who go short expect the currency price to fall from the entry point.
Buying and selling are basically for spot trades, while you can go long and short on a cryptocurrency without actually buying or selling it. This is only possible if your cryptocurrency exchange platform offers future options and other derivative products.
In other words, going long and short reflects whether a trader believes a cryptocurrency is going to go up or down in value. If going long, then it is equivalent to buying the cryptocurrency or opening a long position, on the other hand, going short is equivalent to selling the cryptocurrency.
It is said that more long positions are seen than short positions in a bull market, as there are more investors who want to profit from the price fluctuation. If a market is bearish, short positions generally outnumber long positions.
Conclusion about positions in Cryptocurrencies
When you enter into these derivatives, you actually get a good exposure to the world of cryptocurrencies through long and short positions, but without owning or trading a particular cryptocurrency.
These are just observations and not strict rules to follow, as expert traders and investors buy on dips and sell at high prices. Experts sell when the price tests resistance levels and open long positions when the price pulls back.
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