📰 Longs and shorts in cryptocurrency trading: the compass of the digital financial market
In the crypto ecosystem, two words mark the direction of millions of traders around the world: longs and shorts. Understanding these concepts is fundamental to successfully navigating the world of cryptocurrency futures, where it’s not enough to guess the price direction, but to know how to position oneself at the right moment.
👉 What does going long mean?
Opening a long position is betting that the price of a cryptocurrency will rise. The trader buys with the intention of selling at a higher price, profiting from the market's upward movement. It is the classic strategy, the one that resembles spot trading the most.
👉 What does going short mean?
Opening a short position is the opposite: the trader bets that the price will fall. They sell a borrowed asset to buy it back cheaper, generating profits in bearish markets. It is the tool that allows traders to not fear declines, but to take advantage of them as opportunities.
📊 The relationship between longs and shorts in the market
The ratio between long and short positions (known as the long/short ratio) has become a thermometer of market sentiment. If longs predominate, optimism prevails; if shorts increase, fear and distrust take hold of traders.
⚡ Why does it matter?
In a market as volatile as that of cryptocurrencies, mastering longs and shorts is key. They not only allow trading in both price directions but also open the door to more advanced risk management and hedging strategies.
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