[In-depth analysis of the cryptocurrency circle] Contract operations require caution, and shorting requires extra caution. Although it is not a taboo, the risk is much higher than spot or long contracts, especially heavy shorting, unless a BTC hedging strategy is adopted. Both novices and veterans should be vigilant, and historical lessons are profound, such as the tragedy of Luna short sellers. Shorting junk coins is easily swallowed by funding rates, and the risk of concentrated chips is high. Rebounds will lead to liquidation, as evidenced by TRB Night.
The safe way is to operate spot, buy when the price drops and sell when the price rises, avoid liquidation, and only bear the risk of selling. I occasionally do this, aiming to cultivate selling discipline, know the pros and cons, face it calmly, and accumulate wealth steadily.
Figure 8.6 GFT case, the position is stable and the price soars, showing that the dealer is in a hurry to close the long position, the funding rate is negative and the contract rises, because the long side is strong. This is the spot pull-up, arbitrage opportunities are present, the contract is low, buy the contract and sell the spot, and vice versa. The huge amount of positions is a sign of rising prices, but the timing of entry is subtle and requires keen insight.
The dealer has both long and short positions, and the spot is in hand, so he can control the market freely. If the short seller exposes his position, he will be hunted by the dealer. Therefore, the dealer is fearless in short selling, while retail investors need to be cautious and not to seek the skin of the tiger.
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