LONG VS. SHORT
If you wish to buy a Bitcoin, for instance, then your account will grow in value as Bitcoin’s price increases. If Bitcoin price decreases, then your account loses value accordingly. Apart from a standard trade (purchase), Kureex platform allows you to open a position that will increase in value as the cryptocurrency decreases in price. This is referred to as selling or going short, as opposed to buying or going long.
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EXAMPLE: GOING LONG
Say Ethereum market price is $314.7. You think that the Ethereum price will go up, so you buy 200 of ETH’s at $314.7. This is equal to the position value of $62,940.
Because Kureex offers leveraged trading, you don’t need to put up the full value of this trade. Instead, you only need to cover the margin, which equals to 1% of a total position size, or $629.40.
If your prediction is correct and ETH price climbs, you may decide to fix a profit. Ethereum price is $354.2 and you close your position.
To calculate your profit, you need to multiply the difference between the closing price and the opening price of your position by its size.
354.2-314.7=39.5, which you multiply by 200 and get a profit of $7,900 because you had a “long” position.
EXAMPLE: GOING SHORT
e Bitcoin is trading around $7,400. You anticipate the upcoming negative news about cryptocurrency market, which will negatively impact the price of BTC, so you decide to sell ten Bitcoins at $7,400 for a total short position of $74,000 in value.
Bitcoin has a margin requirement of 1% (1:100 leverage) so you need to deposit $74,000×1%=$740 as margin collateral.
The announcement is a disappointing one, and Bitcoin drops to $7,354. You’re ready to secure your profit, so you buy back 10 BTC at $7,354
Because this is a short position, you deduct the closing price ($7,354) from the opening price ($7,400) of your position to calculate profit, before multiplying by its size of 10.
