Short Position: Margin Trading on Bitcoin Price Fall

Short position is selling currency borrowed from broker, with intent on buying it back later at a lower price.

Let's consider an example - a falling market. This has a potential to make profit to a trader. This is called a short position.

1) Enter the amount of currency to sell. 

2) Chose margin. In short position loan amount is the full position amount, margin will let you choose how much money to use as insurance. 

3) Leave the Stop loss price as is or modify it. You are able to decrease it to lower your risks, or increase it to allow for greater market fluctuations (but a higher risk to you).

4) Open your position. Detailed position data will be displayed.

5) Confirm and place your position. If the market moves while viewing the details, the position will not be opened, and new details will be offered that reflect current best offer. On a busy market this can be a little frustrating, so you can flag this feature off and open a position with best current conditions provided by the exchange.

6) Track your position. Just as with long position, use unrealized P/L column to track the position health. P/L will show negative values if the market does not favor your position at the moment, so you may close it manually at any time to stop potential loss, if you so desire. Positive P/L values mean that your position is favored by the market, and closing it at profitable value can be beneficial to you. 

7) Close your position. The currency needed to repay the debt is bought and given back. You get the rest of the money (provided the position was profitable) as well as the amount reserved as insurance initially. If your position is not profitable, some of the reserved insurance will be used to repay the broker. 

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20 Comments

  • 0
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    Kgalema jude mphahlele

    hi i sit possible to trade on market by using your own funds, and if so how long is the position given for such situation

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    Kgalema jude mphahlele

    i mant so say"is it" on the first line

     

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    Akhil G

    You may place market orders or limit orders using your own funds only. Margin trading can be done using leverage only.

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    Topping Bowers

    Akhil: can I close the position with my own balance though? If I see a market opportunity I'd like to take it while I wait for my deposit to clear.

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    Akhil G

    Sorry, didn't get your query clearly.

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    up106484207

    Hey how do i set the price to to close my margin position? 

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    Akhil G

    Please check the stop-loss price for closing position

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    up106484207

    Hey no i meant, is it possible for me to set a target price? Let's say i go short at 226 and want to set my target at 221 to automatically close position. Is there any way to do so?

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    Akhil G

    Target price option is not there as the risk prevention mechanism automatically closes the position in case there is a risk of going to loss minimizing it for the users.

  • 0
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    up107338138

    We have a weird problem, when making Margin Trading. When trying to short Bitcoin using our USD wallet with 1:3 leverage, for some reason the amount is not the one with started the trade with. Example:

    We have shorted 0.05BTC, but even the notification messages shows that we have actually shorted close to 0.033..BTC and our profit is calculated on that amount, so in order to actually short 0.05BTC, we have to set the amount to 0.075BTC. But the fees are calculated based on the amount we have set and not on the true amount. The weird thing is that, if we are going long with the same amount and leverage everything is at is. I searched everywhere for an explanation for this and could not found anything?

    Any ideas?

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    Akhil G

    Is it possible for you to give me the order number under the example you have given?

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    up107338138

    Akhil G, you can check transcation ID: 196512, if you try to calculate the profit, it should be 0.36 minus the fee, but it's 0.24.

    The same weird behaviour is visible when doing a long position on BTC, when using BTC in the wallet and using BTC as collateral currency. OrderID: 196218

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    Akhil G

     I see that this order has the following case:

    Your amount: $70.67

    Borrowed amount: 141.33 or 0.033333339622791 BTC(Open price = $4239.8992)

     

    At closing position the price for BTC= $4232.6992 so the amount to be returned is 0.033333339622791*4232.6992= $141.089999954715905

     

    Net amount comes out to be $212-141.089999954715905= $70.910000045284095

     

    Subtracting fee of $0.15= $70.760000045284095 -$70.67= $0.090000045284095 ~ $0.09.

     

    Your net profit will be   resulting amount -initial amount 70.760000045284095

    Edited by Akhil G
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    up107338138

    Akhil,

    When using leverage 1:3, I expect to borrow 141.33 and actually open a position of $212 which is 0.05BTC, which actually the amount I have entered when opening the short position. That behaviour is acting correctly when I open a long position, but when I open a short position even though I enter an amount of 0.05, the amount is actually 0.0333. Is there a logic why the short and the long position are different, it is very confusing. 

     

     

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    up107338138

    You can check Order ID: 196319, according to your explanation the profit should be less than what is shown. 

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    Akhil G

    The funds borrowed in specific currency are returned back in the same which depends on the price  change too.

    As explained the the tech team I am replying to you.

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    up107338138

    That still does not explain the different in amount used when making short and long positions with the same leverage and the same currency as collateral. Like I said there is a big different in the profits calculation for OrderID 196319(long) and OrderID 196512(short). Please tell your tech team to compare these two orders. They have exactly the same parameters and completely different outcomes in terms of profit calculation, which is the confusing part and I don't think it's related to the borrowed amount. 

    For us this looks like a bug, you don't want to fix. 

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    Akhil G

    Please check the currencies in both order they are different. I have rechecked with the tech team , the margin trading works on certain specifications and it is not a bug

    Edited by Akhil G
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    up107338138

    No, they are not different, your system for some reason show them as different. But here are the original orders:

    Currency Pair: BTC/USD

    Collateral Currency: USD

    Amount: 0.05

    Leverage: 1:3

    This was used for both positions, the only difference is that one of the position is LONG and the order position is SHORT. Nothing else was changed. I have not idea why your system show different currencies afterwards in the history, like I said this is very confusing. If you basically only do a long or a short, they should be the same with the same amount.

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    Akhil G

    Zhen Wang

    I have already mentioned it is not a bug and teach team has confirmed it.

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