Most crypto investors think there is nothing they can do during a bearish market. In fact, they can perform short selling or shorting through the Futures market. So, what is short selling? How do you short sell correctly? Find out more in the following article.
Key Takeaways
- Definition of Short Selling: Short selling is a trading activity in which a trader sells a futures contract on the open market, expecting its price to fall. The trader profits when the price continues to fall. This strategy allows traders to gain profit during a bearish market, but it carries high risks such as overleverage and liquidation.
- Chart Patterns for Short Selling: Three main chart patterns can be used as a reference for opening a short position: Double Top, Descending Triangle, and Head and Shoulders. These three patterns generally indicate a bearish reversal signal.
- Short Selling Tutorial on Pintu: Short selling can be done on Pintu Futures. The steps include opening the Futures page, selecting the leverage level (ranging from 1x to 25x), and then opening a Sell (Short) position while setting Take Profit (TP) and Stop Loss (SL) as part of risk management.
What is Short Selling?
Shorting or Short selling is a trading activity in which a trader sells a futures contract on the open market, expecting its price to fall. The trader profits when the price continues to fall. Additionally, traders can use leverage to further increase their potential profit.
With short selling, traders can still gain profit amidst a bearish market. However, like other Futures trading, there is a risk of overleverage and liquidation if the trader’s analysis is wrong. The analysis for shorting is also very different from the long strategy more commonly used by many Futures traders.
Short selling or shorting in crypto generally uses perpetual contracts. This is different from the stock market, which usually has a time period.
Learn more about how the futures market works in Pintu Academy.
3 Strategies for Short Selling
The following are several chart patterns that can be used as a reference for entering a short position:
1. Double Top
A double top is a bearish reversal pattern where an asset tries to break through a resistance point but fails on the second attempt. After that, the asset experiences a sharp correction. The double top pattern is confirmed when the price breaks below the low point of the previous pullback (neckline).
The double top pattern usually precedes a sharp correction until the asset reaches the next support point. The strategy a trader can employ is to open a position at the second peak (second top) or below the neckline. Then, the trader can set a stop-loss above the neckline and determine the take-profit level at the next support point.
Find out more about the double top and other chart patterns in Pintu Academy.
2. Descending Triangle
The descending triangle is a pattern that occurs in a downtrend, formed by a series of lower highs that are getting progressively lower. In addition, there is a series of equal support points in this pattern. Then, this support will be tested several times until it finally fails to hold. This pattern will form a downward diagonal triangle.
The meeting point between the two lines is then used as a reference for opening a short position. If the price finally breaks through the support level on the horizontal line, a further price correction can be expected. Therefore, the area below the support level on the descending triangle can be an ideal entry point.
A descending triangle does not always signal a bearish trend. If the asset price experiences a breakout at the right side's end, the bearish trend could turn into a bullish one. You can set a stop-loss target at the resistance point or the peak of the last lower high as a risk mitigation measure.
3. Head and Shoulder
Head & Shoulders is a bearish reversal pattern that can signal to open a short position. It starts with the price movement reaching a high point (left shoulder), dropping, then rebounding and forming a second, higher high (head). Finally, the asset price drops again and creates a final high point (right shoulder).
These three points will form three peaks, with the middle peak higher than the others, like a head with left and right shoulders. The important thing in the head & shoulder pattern is the neckline, which is a straight line drawn as support. If the price breaks below the neckline, it means the head & shoulder pattern is confirmed.
Traders can use the neckline area as an entry point. Another alternative is to enter after the third peak has formed.
Tutorial Short Selling di Pintu
You can perform shorting or short selling on Pintu Futures! The following are the steps to open a short position, assuming you already have assets on Pintu Futures.
Step 1: Open the Futures Page
Open the Pintu application and click “Futures” to access the perpetual futures market page. You can select the asset directly in the tab at the top. In the example below, we are looking at the ETHUSDT-PERP chart.
Step 2: Determine Your Leverage
Now, you can choose the leverage you will use on Pintu Futures, ranging from 1x to 25x! The higher the leverage, the higher the liquidation risk.
After you decide, click confirm.
Step 3: Open a Short Position
On the Futures page, you can see the buy (long) and sell (short) buttons. Before opening a position, check the order type you want (the image below shows a limit order). Also, don’t forget to determine TP/SL as part of risk management.
Every position you have will appear at the bottom, along with profits and losses (PnL). A short position will profit as the price falls and lose if the price rises.
How to Use Pintu Futures Web
Besides trading Futures on the Pintu application, you can also trade Futures on Pintu Web:
- Open https://pintu.co.id/
- Click the Futures button.
- Click Trading Futures on Desktop.
- Then click Register or Login if you have already registered.
You can also access Pintu Futures directly through the Pintu application by selecting the Futures tab on the main page or accessing it through the Market page on Pintu.
Disclaimer: All articles from Pintu Academy are intended for educational purposes and do not constitute financial advice.
Conclusion
Isn’t it easy to short-sell on Pintu Pro Futures? In addition to opening short positions, you can also open long positions on Pintu Pro Futures! So what are you waiting for? Try Pintu Pro Futures and enjoy 5x leverage, risk management, cross-margin, and top-quality security.
You don’t need to worry about any fraud or scams on Pintu. This is because all crypto assets on Pintu diligently evaluate all its crypto assets, highlighting the significance of being cautious. Download Pintu app on Play Store and App Store! Your security is guaranteed because Pintu is regulated and supervised by Bappebti and Kominfo.
Aside from buying and trading crypto assets, you can expand your knowledge about cryptocurrencies through various Pintu Academy articles. Updated weekly, all Pintu Academy articles are made for knowledge and educational purposes, not as financial advice.
References
- James Chen, Descending Triangle: What It Is, What It Indicates, Examples, Investopedia, diakses pada 30 Oktober 2024.
- James Chen, Double Top: Definition, Patterns, and Use in Trading, Investopedia, diakses pada 30 Oktober 2024.