Long and Short Positions in Crypto Trading

Long and short positions are the two basic terms every trader learns at the very beginning of their trading journey. Going long is to own the asset and expect the price to increase, while shorting is waiting for the price to go down and buy back the asset at a better price to make a profit

Unlike other assets, cryptocurrencies are highly volatile, and that can work in the trader’s favor whenever they succeed in deriving profits from price fluctuations. Regardless of what trading style or strategy you’re choosing, understanding core concepts like short and long trades is a must.

Short and Long Terms Basics

In the middle of the XIX century, the terms came into general use in the US stock and commodities market. When the first crypto markets started making their appearances, short and term positions quickly became a part of the trading slang as well.

Bull traders expect the price to rise and hence hold long positions while  bears expect the price to go down, so they sell the asset, to buy it back at a better price. Now, let’s look into what this means in practice. 

In a long position, traders assume that the asset price will rise from a current point. Thus, the trader chooses to “go long” and buys the coins. At the same time, in a short position, the trader thinks the price will now start falling and “goes short”, selling the digital assets.

Long Positions Action Plan

When going long, traders use a universal profit-making strategy of buying cheaper and selling more expensive. This behavior is often typical for beginners.

Here’s how you do it:

  • Analyze the market, find an asset that is most likely to go in price in the near future, and buy it;
  • Wait until the price starts rising. Sometimes, it might take a while;
  • Sell the asset and enjoy the profit.

The trickiest part is to sell the asset on time. Considering it is not easy to predict when the price stops rising, chasing the highest price may be a losing game. If you lose the opportunity to sell for profit, you have a couple of options: One is to absorb the losses and sell their assets. Another is to wait until the price rises again.

It’s worth noting that long trades are very common and can be executed on any exchange. 

Short Positions Action Plan

When traders go short, technically, they sell the assets they do not own yet to buy it later at a lower price. Fundamentally, the short trades concept implies that the assets have to be borrowed before selling.

That’s your basic action plan when going short:

  • Analyze the market and look for the coins that might go down in price
  • Loan them from the exchange and sell them instantly
  • When the price falls, buy back the coins you sold and pay back the exchange

Short trades are not universally available, and you need to make sure your exchange is offering this service. HitBTC is one of the few exchanges that features margin trading, allowing traders to go short. 

Margin Trading

Margin trading enables traders to open short and long positions, considering they provide collateral. The collateral is a funds deposit that serves as a guarantee that the debt will be repaid. Margin trading is similar to credit leverage and practically increases a trader’s deposit by using a loan. In crypto, the coefficient may vary drastically, from 2:1 to 100:1 and higher.

Suppose everything goes according to the trader’s plan. In that case, their profit will increase proportionally to the leverage, and when the position is closed, the collateral and the fees will be paid back. Also, the remaining amount (trader’s actual profit) is deposited into the user’s account. 

If a trader’s predictions are wrong, and the asset goes in the opposite direction than the trader predicted, the exchange will liquidate positions and repay the borrowed funds to the trader once the asset price matches the loan amount. Before the liquidation, the trader will receive a margin call, meaning a request for more collateral in order to avoid complete liquidation of the position.

Moreover, traders are free to close the unsuccessful trade themselves at any period before the liquidation without losing the entire position but only a part of it. 

Longing and Shorting Crypto via Margin Trading

Longing crypto can be done by buying Bitcoin on the exchanges and selling it when the value rises. However, a more advanced and profitable way to long crypto is to use margin trading on exchanges like HitBTC. 

When longing via margin trading, one will have to put up collateral to borrow money and use it to purchase more crypto. The advantage of margin trading for long trades is that they can be exceptionally profitable, however, it does come with a certain risk.

As for shorting crypto, margin trading is the easiest and most widely-used way to do it. Benefiting from both rising and falling prices makes shorting a more flexible strategy. 

Advanced trading strategy

When trading in volatile and high risk financial assets such as crypto, you may choose to hedge, or in other words protect your portfolio from losing value, by using techniques that lessen the impact of unpredictable negative events.

If you are long on a crypto asset, and you believe that the long term value will increase, however, you analyse the market and see that there is a potential fall in price in the near future, you may use margin trading, and short the same asset using leverage. If you expect a 5-10% price decline it is a reasonable hedging strategy to short 5% of your position, so that in case the price goes down, you have some protection for the losses, and if the price continues the bullish upwards trend, you benefit as your overall position is long on the stock.

Furthermore you can protect your position by using limit orders to buy or sell at certain prices, which may often be a safer option as it executes commands with machine-like speed, and can operate when you are away from the terminal. You can read more about such orders here.

Final Thoughts

You have to keep in mind that trading is a high-risk activity. As a trader, you need to try minimizing risks while making sure you still get your profit. 

The idea of going long is in essence buying an asset expecting it to go higher in value so potential profit is unlimited when opening long positions, but you cannot lose more than you initially invested. For instance, $50 worth of coins can potentially end up being worth $50,000 if the token price goes up drastically. Meanwhile, if the price drops, you won’t lose more than $50. Those who look for higher profits can also use margin trading to go long in crypto. Using Short trading has a similar underlying mechanism, and you cannot lose more than you initially invested.

Overall finding the optimal trading strategy that is most suitable for you comes down to market analysis and personal risk tolerance. Do your own market research and choose the instruments that suit your trading profile the most. 

Сrypto wallet App

The HitBTC crypto wallet is a free and simple solution for beginners.

App on Android and iOS.

Fees and Limits update

We have recently updated our fees and limits. For the latest updates, please visit the fees and limits section on our website here. 

HitBTC Mobile App

Don’t forget that you can trade on our platform from your mobile device. Start today by downloading the HitBTC App on Android and iOS.

Perpetual Futures Trading is now live on HitBTC

Perpetual Futures

We are pleased to announce that Perpetual Futures contracts with up to 75x leverage are now live on HitBTC.

Now you can trade BTC, ETH, TRX, BCH, ADA, DOT, SOL, EOS, AAVE, MATIC, XLM, UNI, LTC, and HIT, our native utility token as perpetual futures.

These contracts are USDT-denominated and use isolated margins, meaning traders can add or remove assets that serve as collateral for a selected position, effectively altering the leverage of that position.

What are Perpetual Futures?

Perpetual Futures differ from traditional futures as they do not have an expiration date. This allows traders to hold a position for as long as they like. Besides that, Perpetual contracts help better manage risk, deploying small amounts of capital to hedge the market.

Like in margin trading, Futures trading also gives traders the option of leveraging funds to maximize profits with low initial investments. The maximum amount of leverage available on HitBTC for futures trading is 75x.

How to Start Trading?

To start trading Perpetual Futures contracts, follow these 4 easy steps:
1. Make sure you have 2-factor authentication enabled.
2. Add assets to your Derivatives Account.
3. Add margin.
4. Make your first trade.
The API instructions are available here. You may find the information about the Futures Trading fees here.

Please note that Futures trading carries a high level of risk, with the potential for both large profits and large losses. Please learn more about futures trading and margin trading on HitBTC.

If you have any questions please don’t hesitate to reach out to our support team who are happy to answer any questions you may have.

We are eternally grateful for the trust you have placed in us over the previous eight years. Our commitment, as it has been in the past, is to continue to provide dependable and secure services that exceed our clients’ expectations. It is our pleasure to welcome you to start trading Perpetual Futures contracts.

HitBTC Token (HIT) is live on Margin Trading

Hit Token Margin Trading

We are very pleased to announce that our native utility token, the HIT Token, is now available for Margin Trading on HitBTC!

That’s right, now you can trade HIT with 3x leverage against the following pairs: HIT/BTC, HIT/USDT and HIT/ETH. Try it now!

Margin trading has been live on HitBTC since July 2020. By using this feature, traders can open positions with smaller initial deposits and access leverage to increase their position size and profit depending on the trading pair that they choose. PNL (profit and loss) is calculated proportionally and traders can keep their positions open by transferring more funds into their margin account.

Margin trading is also available on the following trading pairs where traders can access x12 leverage on BTC/USDT and ETH/USDT, 10x leverage on EOS/USDT, TRX/USDT, LTC/USDT, ETC/USDT, ADA/USDT, XMR/USDT, EOS/BTC, TRX/BTC, LTC/BTC, ETC/BTC, ADA/BTC, XMR/BTC.

5x leverage on BSV/USDT, ZEC/USDT, DASH/USDT, XLM/USDT, NEO/USDT, VET/USDT, DOGE/USDT, BSV/BTC, ZEC/BTC, DASH/BTC, XLM/BTC, NEO/BTC, VET/BTC, DOGE/BTC, XTZ/BTC, XTZ/USDT, TON/BTC and TON/USDT

And, 3x leverage on XRP/EOS, TRX/EOS, XMR/EOS, LTC/EOS, DASH/EOS, XEM/EOS, NEO/EOS, TRX/ETH, XMR/ETH, DASH/ETH, XLM/ETH, ZEC/ETH, ADA/ETH, MKR/ETH and x5 leverage on.

Read more about margin trading on HitBTC.

Fees and Limits update

We have recently updated our fees and limits. For the latest updates, please visit the fees and limits section on our website here.

HitBTC Mobile App

Don’t forget that you can trade on our platform from your mobile device. Start today by downloading the HitBTC App on Android and iOS.

HitBTC Launches Its Native Utility Token HIT

HitBTC token

HitBTC is announcing the launch of its native utility token, the HIT token, which will become the foundation of the HitBTC ecosystem. HIT will be used to provide incentives and rewards to the exchange traders and ecosystem contributors.

Geared towards growing our community and enhancing the overall trading experience for our existing HitBTC users, the HIT Token gives the holders exclusive trading benefits including:

  • Trading fees discount up to 45%
  • Low commissions for HIT trading pairs

With the growth of the platform, HIT will extend the utility within the HitBTC ecosystem, offering:

  • Lower margin interest and higher leverage limits on margin trading
  • HIT as collateral for margin and futures trading
  • Decreased fees for the upcoming futures contracts
  • Higher Affiliation program rebates
  • Higher Staking rewards
  • Governance right on future token listings

Token Supply:
HIT is an ERC20 token with a maximum supply of 2,000,000,000 tokens.

Token Allocation:
30% (600M) of the total HIT tokens is sold publicly. There is no pre-sale of HIT to private investors. All 600M tokens is sold in open markets.
20% (400M) of the total HIT tokens is allocated for the founding team.
50% (1Bn) of the total HIT tokens is allocated for the development of the HitBTC ecosystem.

Token Burn Mechanism:
HitBTC will spend from 20% and up of our monthly trading commission revenue (not more than 50% of the total emission) to buy back HIT and burn them on a monthly basis. The token burn will reduce the circulating supply of HIT until there are only 1Bn HIT tokens left.

We are eternally grateful for your trust in us over the last eight years. Our dedication, as in the past, is to continue to provide reliable and secure services that go above and beyond our clients’ expectations. It is our pleasure to invite everyone to join us in creating an ever better exchange with the HIT token.

Read the full information about HIT in the Whitepaper.

New pairs available for Margin Trading

Margin Trading New Pairs

We are very pleased to announce that even more trading pairs are available for Margin Trading on HitBTC!

Now you can access x3 leverage on XRP/EOS, TRX/EOS, XMR/EOS, LTC/EOS, DASH/EOS, XEM/EOS, NEO/EOS, TRX/ETH, XMR/ETH, DASH/ETH, XLM/ETH, ZEC/ETH, ADA/ETH, MKR/ETH and x5 leverage on XTZ/BTC, XTZ/USDT, TON/BTC and TON/USDT.

Margin trading has been available on our platform since July 2020. With this feature, you can open positions with smaller initial deposits and access leverage to increase your position size and profit depending on the trading pair you choose. The feature is available on both desktop and mobile allowing you to trade on the fly and adjust your position size to ensure that in case of a partial closing of a position, your PNL (profit and loss) is calculated proportionally and you can keep your trades open by transferring more funds into your account.

Margin trading is also available on the following trading pairs where traders can access x12 leverage on BTC/USDT and ETH/USDT, 10x leverage on EOS/USDT, TRX/USDT, LTC/USDT, ETC/USDT, ADA/USDT, XMR/USDT, EOS/BTC, TRX/BTC, LTC/BTC, ETC/BTC, ADA/BTC, XMR/BTC and 5x leverage on BSV/USDT, ZEC/USDT, DASH/USDT, XLM/USDT, NEO/USDT, VET/USDT, DOGE/USDT, BSV/BTC, ZEC/BTC, DASH/BTC, XLM/BTC, NEO/BTC, VET/BTC, DOGE/BTC.

Read more about margin trading on HitBTC.

Fees and Limits update

We have recently updated our fees and limits. For the latest updates, please visit the fees and limits section on our website here.

HitBTC Mobile App

Don’t forget that you can trade on our platform from your mobile device. Start today by downloading the HitBTC App on Android and iOS.

HitBTC Introduces Margin Trading on the Main Platform

We are pleased to announce that we’ve added a margin trading tool, previously a core feature of Demo HitBTC, to the main platform, giving our users the opportunity to leverage the funds they already have. By operating with a certain amount of money borrowed from the exchange, users will be able to amplify their trading positions and multiply their potential gains. But first, to open a trade, they have to put forward collateral equivalent to a particular percentage of the full value of the position. This collateral constitutes the margin.

This tool can be used for all the order types currently available with normal trading. The only thing different is the amount of potential profit, which increases due to the ratio of borrowed funds to the margin that is leveraged. Currently, to get a taste of crypto margin trading, HitBTC is offering a leverage rate of 10x for five markets including BCH/USDT, XRP/USDT, ETH/BTC, BCH/BTC, XRP/BTC, and now up 12x for BTC/USDT, ETH/USDT.

Update: New pairs added to our new margin trading feature! Enjoy up to 10x leverage on EOS/USDT, TRX/USDT, LTC/USDT, ETC/USDT, ADA/USDT, EOS/BTC, TRX/BTC, LTC/BTC, ETC/BTC, ADA/BTC and up to 5x leverage on BSV/USDT, ZEC/USDT, DASH/USDT, XLM/USDT, BSV/BTC, ZEC/BTC, DASH/BTC, XLM/BTC.

How does margin trading work?

Let’s consider a hypothetical example. Let’s say you have 400 ETH  on your account balance, or enough ETH to purchase 10 BTC. After a while, you see the price of the latter increases by 100 units, so you decide to sell 10 BTC for 1400 ETH. Consequently, your profit here is 1000 units.

And now suppose that you would like to use the maximum x10 leverage and borrow 3600 ETH from the margin lender, depositing the same 400 units as collateral. Then you spend your 4000 ETH to buy 100 BTC. In this scenario, if the price of the latter increases by the same 100 units, you will be able to sell your 100 BTC for 14,000 ETH and gain a profit of 13,600 units – or ten times more than you would have made with only your initial investment.

This also works when market prices drop. In this scenario, you take your 400 ETH and sell them for 94,000 USDT. If the price of the former falls by 200 units, you then will have an opportunity to buy these 400 ETH for 14,000 USDT, leaving you with 80,000 more USDT as a profit.

But if we add 3600 ETH borrowed from a broker and sell 4000 ETH for 940,000 USDT, the same price drop will result in the ability to get your 4000 ETH back for 140,000 USDT, plus a profit of 800,000 USDT, which is ten times more than you would have had without using margin.

Margin call level and margin liquidation level

The margin call level applies to the ratio of your account balance to the used margin, calculated in percent, at which your open positions are close to be liquidated by a broker. When this happens, users will receive a call notification in the form of a pop-up appearing in the browser and suggesting that they either close some of their positions or add some more funds to their margin. But it is also crucial to constantly monitor the margin level yourself in order to be able to increase the amount of collateral and reduce liquidation risks in time. At margin call level no automatic liquidation occurs.

Margin liquidation level is the level that initiates the automated liquidation process, meaning that it is no longer possible to prevent the liquidation once it has started. In our case this occurs when the market price is equal to the liquidation price established by the exchange.

PNL (profit and loss)

PNL is the capital gains you have accumulated, measured in USD, between your deposit and your final payouts. PNL is credited to your balance as soon as you close your position and can be subsequently transferred to your trading account along with collateral funds.

The partial closing of an open trade will realize your PNL in proportion to the value of the relevant position, which users are enabled to both increase and decrease within the valid buying power range.

Margin fees

All fees charged by a broker for the use of borrowed funds are in addition to the regular trading fees that vary based on the total volume of the trade. Our margin fees are fixed, so they do not depend on the period of time during which your position is open, and offset independently once every eight hours from your margin account.

Margin trading advantages

This tool  allows traders to expand their market activity by increasing their position sizes. You can try Bitcoin margin trading if your account balance is not sufficient to trade, but you consider the market conditions to be favourable. Moreover, with margin trading you have the opportunity to boost your gains in a much shorter period of time.

However, doing this successfully requires a more advanced level of knowledge and trade experience, owing to the high volatility of the crypto market. If you are a novice in margin trading, we highly recommend that you practice this strategy on our demo platform first before trading with real funds. You can find more information on how to get started on Demo HitBTC here.

But one more rule, which is always appropriate in crypto, is that you should do your own research and trade in accordance with the current market situation.

Get started

To start margin trading, head over to the relevant  tab and press “Margin” to add collateral funds to a margin account. Please keep in mind that at this stage your verification level and 2-factor authentication status will be checked. Then choose your trading instrument in the pop-up, enter the amount of your collateral into “Amount” and press “Transfer.” 

It is noteworthy that the sum transferred to the balance cannot exceed the amount of funds stored on the trading account and will be used for operating the particular trading instrument you have chosen. 

Now you are ready to trade on margin with an enhanced buying power. Later, you can examine the history of all your requests, trades, positions and fee charges via the terminal or Reports tab.

Good luck!

HitBTC product update: Post Only orders

Dear traders,

Today we introduce the new “Post Only” option for limit orders, also known as “Add Liquidity Only” orders.

Usually, traders use Post Only orders to avoid paying the Taker fee and prevent faults of entry, as incorrect orders would fail to be executed.

How it works:

  1. Upon arrival to the matching engine, a check will be performed to ensure that the Post Only order does not remove liquidity from the order book.
  2. In case any part of such order matches with a pre-existing order, it is immediately removed before executing.
  3. Post Only limit order resides in the order book until it is filled as a regular limit order.

In other words, this order type guarantees that the order only brings liquidity to the market, and never removes it.

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Restart of the IDH market

Dear traders,

The HitBTC team works to improve the trading experience, the range of instruments and opportunities on our platform.  We have received numerous requests for adjusting the IndaHash trading process – so starting from today the IDH price becomes more variable, precise and convenient due to more available decimal places.

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Monero Classic – original Monero chain

Dear traders,

We are glad to announce that Monero Classic (XMC) is now available for trading on HitBTC.

Monero Classic is Monero original chain retained after Monero team initiated the hard fork at block height 1546000 to become anti-ASIC. Monero Classic is based on CryptoNote protocol and retains all parameters and features of the original Monero chain. The team behind Monero Classic will continue to build the ecosystem based on the original Monero features, making the original chain of Monero and its surrounding ecosystem thrive.

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Introducing “over-the-counter” (OTC) trading

Dear traders,

Our team cares equally about our traders with all levels of experience and keeps exploring the options that can improve our clients’ trading strategies and offer greater freedom to them.

HitBTC in partnership with Extendeddealer.com is introducing OTC or “over-the-counter” trading option, suitable for our advanced level traders. The concept of OTC is that two counterparties directly agree to perform a certain trade at a set price, without being obliged to go through the exchange to execute the deal.

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