Risks of short selling
Short selling any cryptocurrency or Bitcoin may seem a fast way to gain profits, but the risks involved are very high due to the fluctuations in the Bitcoin market. Hence, understanding the risks should be a vital part of learning how to short Bitcoin.
In a typical trading process, you buy Bitcoins at a fixed price and sell them in the future when the cryptocurrency prices go up. As there is no upper limit on the Bitcoin prices hike, the profit potential is also unlimited. The maximum amount you can lose as a trader is how you have purchased your Bitcoins. Contrary to this, when you sell Bitcoins, the situation becomes reversed as there is no upper limit of the Bitcoin price hike, and your losing potential becomes unlimited.
How risky is shorting Bitcoin?
Bitcoin prices can soar beyond expectations as there is no upper limit on the value. It also means that the coins can take a dip which can cost you your investment. Ideally, a drop to 0 is highly unlikely, and the volatility numbers firmly support it. There were occurrences of sharp market corrections that slashed over 20% of the coin’s value in a matter of minutes.
Risk assessment is crucial before venturing into crypto trading. You should have a clear idea about the losses you are willing to take if things go south. This is where stop orders come in. Stop-loss allows users to set specific sell/buy points. It essentially acts as a cashout button that users can leverage to prevent significant damages to their investment. We at CAPEX encourage users to utilise the stop-loss feature to manage their assets.
Conclusion – Trade Crypto CFDs at CAPEX
So, these are some ways with which you can short Bitcoin and make profits. Shorting a Bitcoin is a great way to gain profits in a short time from declining assets. But keep in mind that though this seems tempting in the first place, it’s also riskier on the other side. The best way out of these for shorting a Bitcoin is through the CFD.
The short process via CFD removes all the hassles of actually buying and selling an asset and allows all the transactions to happen in price difference. So, register with us at CAPEX now to start trading in Bitcoins via CFDs and make large profits.