Can you profit from a red market?
Seeing the market collapse is extremely stressful for any trader or anyone holding cryptocurrency assets.
However, those who take trading seriously should not despair.
You can still take advantage of the market in red.
You will need trading skills, a little foresight and a platform that supports both long and short positions.
What are long positions and short positions?
Entering a long position means that you have purchased certain assets that you now own, so to make a profit, you hope the price will rise.
A short position is slightly more complicated than that.
It’s a technique used by experienced traders who believe the price of a stock is going down, you’ll have to borrow the stocks from the Exchange to sell them back at a lower price.
So, you’re hoping the price will drop so that the difference between the two purchases is your profit.
One of the most common ways is to use a Margin Account, where you’re basically borrowing the asset.
All best Exchanges have it.
What’s a Margin Account?
By definition, “a Margin Account is an intermediary account in which the broker lends money to the client to buy shares or other financial products“.
Although Margin trading can earn you much higher profits, the same applies if you lose: you will lose both your funds and those borrowed, in addition to which you will have to pay a certain amount of interest.
This is why margin trading is extremely risky and should be approached with the utmost caution.
Add to that the intrinsic volatility of the cryptocurrency market and the situation gets more complicated.
But, as we said, this is also an opportunity for an experienced trader to profit even when the market is turning bearish