How to bet against Bitcoin (How to short Bitcoin)

Categories: Educational articles | Published by: Dimitar Dimitrov

21/06/2021

Guide to betting against Bitcoin a.k.a to short Bitcoin on a leverage trading broker like Margex

Bitcoin is one of the most volatile assets in the world at the moment. On top of everything add that it is still in the early days and that the market cap is still small when compared to other traditional assets that are traded on a similar global level, therefore a small amount of capital (few millions) can affect the market price quite heavily. This is why we are seeing Bitcoin moving quite violently in both directions.

A few years back you could only long the market or sit on the sidelines waiting for the prices to fall and buy again. With the development of the market came trading exchanges like Margex and Bybit that provide the option to short the market. At some point in time Bitcoin falls like a hammer on a nail and many people want to take advantage of those negative moves by shorting Bitcoin with high leverage.

A step by step guide to trading Bitcoin with leverage on Margex

First thing first – opening an account on Margex. Click on the button in the top right corner of the homepage – Start Trading.

Opening an account

The registration is very easy and can be completed in a few minutes. You only need to include e-mail, password and you are set to go.

A few steps are required in order to open an account on Margex

Depositing Bitcoin to Short it or Long it

After you confirm your registration you need to deposit funds in order to be able to trade and in the case of this short tutorial – to short Bitcoin with leverage.

Click Wallet (1) and click on Deposit (2) which will show the Bitcoin address to which you can directly deposit funds. You can also deposit, buy Bitcoin on Margex through Changelly by using Credit/Debit Cards.

How to short Bitcoin (Bet against Bitcoin)

After depositing go to the trading dashboard by clicking Trading (1) in the top menu. Now as we are on the Margex trading platform you can start trading bitcoin – long or short it as much as you like.

Depending on the market you can either decide to long or short Bitcoin – bet that the market will go down or bet that the market will go higher a.k.a where the price of Bitcoin will go.

Open a position with leverage

Click on Buy/Long or Sell/Short (2) to open a position by setting an order either Market or Limit. A market order will open a position right away at the current spot price while with a Limit Order you can set an order to be executed if the price reaches a certain price level. Depending on the situation you can use both.

The following example will be done with a limit order that is valid for both options.

The steps to opening a long or short position for Bitcoin with high leverage

First start by setting the size of the position in USD (1). After that set the price level (2) at which you want the order to be executed. Then you can adjust the leverage that will be used for that position (3). Keep in mind that the higher the leverage you use the closer the liquidation price will be but also the potential rewards will be higher at the cost of higher risk. When you are done with the settings you can click the red button to short Bitcoin (4).

Limit order results in active order that you can see in the dashboard on Margex

This is how an active order looks after using the Limit Order option.

Closing a position and taking profits

How to close a position on Margex in order to take profit or cut loses

To close a position, take profits or cut losses you need to click Close. When you click on it two options will show up – Market or Limit. Choosing Market will close the position on the second while Limit is setting a level at which to take profit.

Conclusion

Congratulations, now you know how to trade Bitcoin – long or short it with leverage. Keep in mind that this is a high-risk play and playing with leverage (day trading) can lead to heavy losses if you don’t know what you are doing. On the other hand, the profits can be significant although at high risk. Also, keep in mind that with high leverage you boost your trading power as 10$ in the trading account at 100x leverage have the trading power of 1000$ and this is where the sign came out. Trade Bitcoin with caution especially if you are new to leverage trading.