1. Analysis of Short Selling and Short Selling Mechanisms#
Short Selling: Holding a bearish outlook on market trends
Short Selling Strategy: A trading strategy implemented based on a bearish judgment. Direct short selling is not possible in the spot market and must be achieved through futures contracts or leveraged trading.
Principle of Short Selling Operations:
Investors believe that the current coin price is overvalued and predict a future decline. They arbitrage through the "borrow first, sell later - buy back at a low price" model:
- Borrow and sell digital assets at the current high price
- Buy back at a low price after the coin price drops
- Earn the price difference (interest on borrowing must be deducted)
Practical Case:
A certain token is currently priced at 10 yuan, and the investor pledges 2 yuan as margin to borrow 1 unit of the token:
- Immediately sell to obtain 10 yuan (funds in a frozen state)
- If the coin price drops to 5 yuan, use 5 yuan to buy back and return
- After unfreezing the funds, net profit of 5 yuan (interest not accounted for)
- If the coin price rises to 15 yuan, additional margin must be provided, or liquidation will occur
2. Detailed Explanation of Bullish and Long Strategies#
Bullish: Holding a bullish outlook on market trends
Long Strategy: A basic trading strategy to obtain profit from price differences through "buy low, sell high"
Bullish Operation Model:
Investors are optimistic about the asset's appreciation potential and execute the "buy at current price - sell at high price" strategy:
- Buy the target asset at the current price
- Sell at an opportune time after the price rises
- Achieve capital appreciation
Practical Case:
Establish a position by buying when SOL is priced at 140U:
- Close the position when the price rises to 280U
- Achieve a 100% return (140U profit)
Note: Both bulls and bears are not specific individuals but a collective of investors with similar market expectations.
Core Summary:
- Long: Expectation of rise → Build position at low price → Close position at high price
- Short: Expectation of decline → Borrow coins and sell → Buy back at low price
- Bull: Market participants with a bullish outlook
- Bear: Market participants with a bearish outlook
@Uncomprehensible sol Original
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Further Reading#
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