If you decide to purchase Bitcoin, the value of your account will increase as Bitcoin’s price rises. Conversely, if Bitcoin’s price falls, the value of your account will decrease. Besides standard trades (purchases), the Options Experts platform enables you to open positions that gain value when the cryptocurrency’s price declines. This strategy is known as selling or going short, as opposed to buying or going long.
Imagine the market price of Ethereum is $314.7. You anticipate that Ethereum's price will increase, so you purchase 200 ETH at $314.7 each, resulting in a position valued at $62,940.
With Options Experts' leveraged trading, you don't need to put up the full amount for this trade. Instead, you only need to cover the margin, which is 1% of the total position size, or $629.40.
If your prediction is accurate and ETH's price rises, you might choose to lock in your profit when Ethereum's price reaches $354.2 and you close your position.
To calculate your profit, subtract the opening price from the closing price and multiply by the position size:
$354.2 - $314.7 = $39.5, and $39.5 x 200 = $7,900 profit, because you held a “long” position.
Bitcoin is currently trading at around $7,400. You predict that upcoming negative news about the cryptocurrency market will drive BTC prices down, so you decide to sell ten Bitcoins at $7,400, creating a short position worth $74,000.
With a margin requirement of 1% (1:100 leverage) for Bitcoin, you need to deposit $740 as margin collateral.
After the disappointing announcement, Bitcoin's price drops to $7,354. To secure your profit, you buy back the 10 BTC at $7,354.
Since this is a short position, calculate your profit by subtracting the closing price ($7,354) from the opening price ($7,400) and then multiplying by the position size of 10: $7,400 - $7,354 = $46, and $46 x 10 = $460 profit, due to your “short” position.
To determine the profit or loss from a long or short trade, multiply the position size by the difference in points between the opening and closing prices.
Profits and losses are realized when the position is closed. Additionally, if you're confident about the market direction, you can use leverage to gain exposure to a much larger position than a standard trade, whether it's long or short.
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