shortselling

When I first started learning about financial markets, I noticed that almost everyone talks about buying low and selling high. That idea is simple and natural. You buy something cheap, wait, and sell it when the price goes up. But during my research, I started to know about another method that works in the opposite direction. This method is called short selling, and it is used when prices are falling instead of rising.

Short selling means selling an asset that you do not actually own at that moment. I have learned that traders borrow the asset first, usually from a broker or an exchange, and then sell it at the current market price. They do this because they believe the price will go down in the future. If the price really does fall, they buy the same asset back at the lower price and return it to the lender. The difference between the selling price and the buying price becomes their profit, after fees and interest.

In my search, I found that short selling is very common in stocks, crypto, forex, and even commodities. People use it when the market is weak or when they believe an asset is overvalued. Instead of waiting and watching prices drop, they try to earn from that drop. This is why short selling becomes popular during bear markets, when prices keep going down for a long time.

The way it works is easier to understand with a simple example. Imagine I borrow one unit of an asset and sell it today for a high price. If the price goes down later, I buy it back cheaper. I return what I borrowed, and the extra money stays with me. But if the price goes up instead of down, I still must buy it back. That means my loss keeps increasing as the price rises. This is where short selling becomes risky.

One thing I discovered while researching is that short selling needs margin. This means I must keep some money as collateral in my account. The platform checks my account regularly. If my losses grow and my balance becomes too low, they can force close my position. This is called liquidation. When that happens, traders can lose money very fast.

Short selling is not only used to make profit. Many investors use it as protection. If someone holds assets for the long term and fears a short term drop, they may open a short position to balance the risk. In this way, losses in one position can be reduced by gains in another.

However, short selling has serious dangers. I found that losses can be unlimited because prices can keep rising without a limit. There are also extra costs like borrowing fees and interest. In stocks, short sellers even have to pay dividends if the company gives them during that time. Another risk is a short squeeze, where prices rise suddenly and force many short sellers to buy back at high prices.

After looking into all of this, I realized that short selling is a powerful but dangerous tool. It can help traders earn in falling markets and manage risk, but it can also destroy accounts if used without care. It is not something a beginner should jump into without understanding. From what I have researched, short selling works best when used carefully, with strong risk control and clear knowledge of how the market behaves.

$BTC
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Following the Bitcoin crash, Ethereum (ETH) officially broke below the psychological barrier of $2,000 early this morning, hitting a new low since May 2025. In addition to being dragged down by hawkish Federal Reserve policies and macro risk aversion sentiment, analyses from XTB and Finance Magnates indicate that ETH's performance is significantly weaker than the broader market, primarily due to on-chain detection of wallets suspected to be associated with Vitalik Buterin and the Ethereum Foundation conducting large-scale sell-offs, triggering panic in the community.
IG Markets report shows that the weekly RSI of ETH has dropped to 33, and the price has effectively broken below the 200-week moving average, indicating extreme weakness in the technical outlook. As institutional funds accelerate outflow from risk assets, the market lacks supporting buying pressure. Strategy recommendation: 'Go short (Short) in line with the trend', if a rebound is blocked near $2,050, it may be a good entry point, with a target aimed directly at $1,800.

Today, the cryptocurrency market continues the "Black Monday" disaster, with Bitcoin (BTC) further testing the $76,000 level. Multiple negative factors have formed a "perfect storm": first, Trump nominated hawkish representative Kevin Warsh as the next Federal Reserve chairman, crushing market expectations for interest rate cuts; second, geopolitical tensions between the U.S. and Iran have escalated, leading to a flight of funds from risk assets towards gold. On-chain data shows that the total liquidation volume across the network in the past 24 hours has surpassed $2.5 billion, with long leverage being severely hit. In addition, the Trump family's cryptocurrency project World Liberty Financial is embroiled in a UAE financing scandal, raising regulatory concerns.