Gate.io futures trading guidance: how to short in a bear market

Introduction

For every investor, 2022 is a complicated year: the US is troubled by deep-rooted inflation and might face potential risks of recession; the Ukraine-Russia war is pending for a long time; Covid-19 is bringing impacts back and forth; the EU is facing high inflation rate as well as energy shortage, …

The crypto industry is also experiencing a complicated year. The crypto Luna crash debilitated 3AC; the liquidation of Celsius made the BTC price take a nose dive. According to Google financial data, BTC has fallen 58.53% from the beginning of this year. All the crypto asset industries are in a deep bearish market.

According to Dow Theory, the market trend has inertia. Once the trend is set, it is very difficult to reverse. In a bearish market environment, investors can only follow the market trend and find futures short opportunities to gain profits.

So, what is shorting? Shorting is a way to gain profits even during a bearish market or market with a falling trend. Users can borrow crypto assets from trading platforms and sell them if they expect the market price to go down. When the price falls to a certain level, users can buy back equal amounts of assets to make a profit from the price fluctuation.

Two standards to assess if it is a bearish market

1.Duration of BTC retracement

To review back the bear cycle in history. The downfall from 2015’s highest point lasted 410 days; the 84% downfall in 2018 lasted 362 days.

In this round, the downfall was 73.3% from the highest point in the bull market and lasted for 227 days. This round of bearish cycles was a historical one in its scale.

Data source: glassnode

2.The change of BITCOIN’s basic value

It’s uncommon to see the spot price going lower than the actual price. It’s the third time to see this happening in the past 6 years. The other two times are caused by the Covid-19 breakout in March 2020 and the market crash in November 2018. These two incidents set the course for a bearish market.

Currently, the trading price of spot products is 11.3% lower than the actual price. It indicates that average traders in the market are paying for their funding fees.

Data source: glassnode

By concluding Bitcoin’s bearish market in 2021-2022, we have reached the following statistical data and observations:

• The price has fallen to -73.3% of ATH, which is in line with the upper limit of previous bearish market low points.
• The duration of the falling period lasts 227 to 435 days. The actual duration depends on the starting position of the bearish market.
• The market is vastly lower than 200 days average line, so only 2% of the trading days have performed worse.
• Statistically speaking, the market has achieved the largest monthly downfall in history.

We are sure to say that the 2021-2022 crypto bear market was the most impactful in history. It is reflected in all perspectives including severity, depth, and scale of capital outflow and investor achievement.

How to open a Gate.io futures short position

1.Create your own trading account

Sign up at https://www.gate.io/signup, enter your email and password according to the procedure, and finish registering! At the same time, remember to do safety verification and KYC, ensuring your account security level is at its highest.

2.Top up and transfer to your futures account

Choose to top up your Gate account from other platforms or buy crypto assets from OTC and transfer assets from spot accounts to futures accounts.

3.Choose a target and open a position

Choose the right trading pair for you, set margin rates, choose position mode isolated/cross margin, choose a way of placing orders, select position direction, and confirm opening positions.

4.Set take-profit and stop-loss

In position holding details, you can see average price of opening position, position value, forced liquidation price, and risk rate. To avoid an increased risk and cause principal loss, you need to set take-profit and stop-loss.

Keep learning. A good attitude is the secret to winning

1.Learn to build your own trading logic and system

A trading system is a complete set of trading rules. A well-designed trading system regulates each relevant role in making investment decisions. It must be objective and clear, and must not be interpreted differently. A well-designed trading system should be in line with the users’ psychological pattern, the statistical identity of the invested targets, and the risk features of the invested capital.

2.Improve your mindset during practice and conquer human weakness

When there are no trading opportunities in your trading system, you have to get your mind right and be consistent with words and actions. It is the prerequisite for enabling your trading system to function.

A good trading system will also cause trading failure if you are a short-sighted person who can’t tolerate holding a zero position, cannot bear the cost of the price rising, and doesn’t know how to control risks and resist temptations. Intervention against the trading system will eventually lead to failure. It can’t be attributed to the failure of the system. It is the failure of your mindset. So, the mindset is the most important thing and it can decide the success or failure of your trading system.

Closing thoughts

In the current bearish market, it might be the best investment strategy to take the opportunity of shorting futures, opening up a short position at relatively high points, and making profits from price downfall. Of course, the crypto market is rapidly changing. Building up your own trading system and putting it into practice. You should have your own logic each time you open up a position. Setting a stop-loss and take-profit is by no means an easy thing. Trading, for sure, is not an easy thing. There is a long way to go. Always have dreams!

To check out more real trading practices, go to Gate.io futures trading. Register a Gate.io account now and start your journey!

Disclaimer

This article is for informational purposes only. Such information provided by Gate.io does not constitute any investment advice and we are not responsible for any investment you make. Technical analysis, market judgments, trading tips, and trader sharing may involve potential risks, changing investment environment, and uncertainties. This article does not provide or imply any opportunities with guaranteed returns.