Why short trades are more risky than long trades.

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November 20, 2024

Hi friend, good morning !

first visit today’s sponsor,

yesterday One of my group member got a question for me,

why short trades are more risky than long trades ?

today I will discuss it with an example.

imaging you entered a BTC short trade at 95K. with 2X leverage.

then your liquidation price is 142K , since you used 2X leverage if market moves 50% you get liquidated.

imaging you entered a BTC long trade at 95K. with 2X leverage.

since you used 2X leverage if market drops 50% you get liquidated.

that means your liquidation price is now 47K.

SO if you long the market , to get liquidated price should drops to half of its value.

which is unlikely.

BUT if you short the market , you get liquidated before price doubles ,

in this example price double means from 95k to 190k.

so , we should consider this according to market cap.

same force need to reduce market cap from half or double the market cap.

so in that way shorting the market cap is more risky and you should think twice before entering a short trade.

we discussed more about these important professional market details in side our communities.

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