RE: How to know when to sell a coin.

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How to know when to sell a coin.

in cryptocurrency •  7 years ago 

Is there a way to short a coin like you can a stock?

cryptocurrency
7 years ago by

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      ·  7 years ago (edited)

    Yes. The problem with shorting things in cryptocurrency world is poloniex is the most popular place to do it, and there are 2 limitations and a downside:

    • Very few coins can be shorted, less than 12, and they are all big coins
    • They can only be shorted against bitcoin, which means you need them to fall in value relative to bitcoin, not relative to the US dollar making prediction far more complicated than a normal short position
      ... meaning if bitcoin drops 10% and the coin your short likewise drops 10%, you break even and paid fees. Best time to short is when bitcoin rallies to the point it causes altcoins to drop. That's really the only time, and you might as well just buy bitcoin on margin and use leverage to ride it higher, rather than shorting.

    Downside is also, expect to pay high interest rates at certain times to borrow bitcoin.

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        ·  7 years ago 

      If the GDAX flash crash of ETH taught us anything it's either (1) don't trade on margin and (2) if you do trade on margin, ensure the collateral is not the underlying you are borrowing.

      Great explanation of a pump and dump with a perfect example of it being done!

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