Long and Short trade is related to buying and selling of cryptocurrencies based on the market price movement. In long trade cryptocurrencies are bought at a price, hoping that prices would increase in the future. The traders would sell the cryptocurrency at increased prices and make a quick profit. In short trade the cryptocurrency is sold at a price, hoping that the prices will fall and the cryptocurrency could be bought later at lower prices.    

This approach is used by many investors to make profits and diversify their portfolios. It is important to understand that crypto traders are either bulls or bears. A Bull takes the risk, while a bear is unfavorable towards risk. When a crypto trader is short selling during a bullish market he is coming out of its stereotype image.   

Best Time to Long and Short Positions

Commonly, most of the crypto traders are inclined to go for long trades, representing bullish tendencies similar to that shown by the market. Over the years cryptocurrency market has grown rapidly and globally as more and more investors have started to show more trust in the cryptocurrency. 2021 was a significant year for Bitcoin as it reached its all-time price high. Among the increase in prices and expansion, correctness continues to surface, giving a lot of space for traders to short their positions.

The belief that long trading is done during a bullish market and short trading is done when there is a bearish phase is not entirely true. Most cryptocurrencies gains when the market is in a bullish phase. Bearish investors trade short-bet against the crypto market, hoping to see a decline in the prices. No matter what phase is going on in the market, long and short trade will also happen, and they will function in a universal way for all kinds of markets and assets. 

Derivatives can be used by investors to combine long and short trading to leverage the fluctuations in the prices of cryptocurrencies.    

Things to remember

Before taking any investment decisions, the traders must perform a thorough technical and fundamental analysis of the market. Hence the traders should be completely aware of the market trends, company profile, and the trade history of the cryptocurrency in which the trader is looking to invest. 

A trader could also use social media platforms, discussion portals, and news sites to gather information about cryptocurrency and the crypto market. 

Price charts can be used by traders to identify any patterns and indicators that will help them in predicting the prices of the cryptocurrency.    

Disclaimer: The article should not be considered as any financial advice. It is advisable to conduct thorough research before investing. 

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