What Is Going Short?
Going short means opening a position that profits from falling prices. In crypto, this is typically done through derivatives — you enter a short position on a futures or perpetual contract that gains value as the underlying asset's price drops. Some platforms also allow margin shorting, where you borrow the asset, sell it, and buy it back cheaper later.
How Going Short Works
Short selling carries unique risks: losses are theoretically unlimited (an asset can go up infinitely but can only go to zero), short squeezes can rapidly amplify losses, and you pay funding rates during bullish markets. In crypto's 24/7 markets, overnight gaps can trigger liquidation before you can react.
Why It Matters for Traders
Shorting is essential for all-weather trading — the ability to profit in both directions doubles your opportunity set. However, shorting against a strong uptrend is a common way to blow up accounts. The best short setups occur after clear distribution patterns, at major resistance with divergence, or when on-chain data shows smart money exiting.
