How to Increase Trading Success When "Shorting" the Market?
Often, market participants open short positions in the derivatives market as a hedge when the market is down, or as a speculative tool hoping for a market crash. So, what can be done to enhance the potential for success when shorting in the crypto market?
1 Wait for the Market to Be in Euphoria Phase.
When planning to open a short position, we must pay attention to the current state of the market. Do not short the market when in fear or neutral conditions. Open a short position when the market is in the euphoria phase and the fear and greed indicators are in a state of extreme fear.
2 Observe the Macro Conditions.
Currently, the crypto market is heavily influenced by macro conditions, which are quite uncertain. Whenever there are bearish macro events, the market will experience a decline. Pay attention to the potential bearish outlook in the market before shorting. Do not short the market when there is potential for a bullish macro event.
3 Wait for the Market to Retest.
If you want to short, the entry must be perfect. Do not short the market when the candle is down because there is a potential for the price to make a v-shape back to the starting point, which could lead to losses. Always wait for a retest before shorting to achieve the best risk/reward.
4 Short Only as a Hedge.
Many people short the market but have no exposure at all in the spot market, and when the market rises, they end up losing "twice." Ideally, opening a short position is a hedge against the spot position held. Thus, when we "profit" from the short trade, we still have a spot position for long-term holdings that we are not concerned about "how much it is worth" in the short term.
$BTC $ETH $ADA #CardanoDebate #IsraelIranConflict #BinanceHODLerHOME #TrumpTariffs