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Make Your First $1000 Shorting Crypto (Step-by-Step) - YouTube
Channel: Max Maher
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For these people, it was.
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23%,
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67%,
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100% profits.
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These members of Finova did it by
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shorting crypto, profiting off the decline.
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You're probably used to praying for prices to go up.
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So shorting Bitcoin feels weird, like now I want
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it to crash and the deeper the better.
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It's strange.
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which feels like 24/7 if you look at the news.
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Of course you need to know about the dangers too,
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because getting it wrong can be a disaster.
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and then I'm gonna reveal some
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Okay, so let's imagine that you want to
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make money on some good old Bitcoin.
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There's a couple of questions you need to ask yourself first.
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Personally, I think it will rise in value
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and I just want to hold on to it for years.
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But not everyone agrees.
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- Well, I think that sucker's gonna crash,
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so I'm going to short Bitcoin.
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- Okay, so there's more than one way to
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skin a Bitcoin because I think price will go up.
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I'm just looking to buy some Bitcoin and hold
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onto it and just hope that prices rise.
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It's just like a straight purchase of anything that
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you buy - food, haircare or other essential goods.
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This type of purchase can work both
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for quick trades or long term investment.
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For every dollar it rises, I earn a dollar in profit.
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It's still risky though, because Bitcoin.
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But the other guy is taking a way
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bigger risk than me by shorting Bitcoin.
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- I'm betting that Bitcoin is going to lose value.
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Now I don't really care if it's genuinely
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overvalued or if it's likely to fall for
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a while and then rise again.
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I just want to see it drop so I can cash out.
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Now it seems a little bit complicated, but
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all I'm really doing is borrowing Bitcoin to
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sell it at current market prices.
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Then I'm hoping for the price to fall because I can
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then buy it back at a lower price, return the Bitcoin
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to the lender and pocket the difference as profits.
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- Why don't you tell them about the terms they need to know?
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- Jesus, I was just getting to that part. Let's be honest,
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you just want to make money.
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You don't really care about the vocab.
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But I suppose I'll cover
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Let's say you hold an asset and it hits an all time high.
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You can open a short position
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on that asset to help
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protect you if that price
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were to drop in the future.
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But personally, I'm just doing this to make some cash.
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- Come on, don't put that on the list.
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All right, moving on.
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So if you're trading $1,000 at 3X leverage, you
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actually get $3,000 worth of exposure to that investment.
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That means for every 1% the investment goes up,
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you're actually making 3%.
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However, there's more to the story, because
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Not only are your profits increased by 3X,
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but so are your losses.
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This can also lead to a liquidation.
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If you're sitting in a position that's 3X leverage
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and that position goes down 33%, you lose everything.
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Again, because of 3X losses, 33.3% x 3
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is 100% of your investment gone forever.
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- Well, technically it equals 99.99%.
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- Just stop.
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The point is, just avoid getting liquidated.
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What's much more interesting than repeating nines
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is that you can short all sorts of things:
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stocks, commodities, cryptocurrencies, monkeys.
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- I think that last one might be illegal.
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- OK, don't tell PETA then,
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but the concept is the same.
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You're betting on price dropping.
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- Oh, tell them what the short squeeze is.
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- Okay, I was getting there.
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Let's imagine a bunch of people are
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holding short positions on an asset.
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They all want the price to fall so they can
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buy the asset back and close the position, pocketing some
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cash, but it starts rising instead, people begin to panic
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and they rush to buy back in at a loss.
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They do this because they want to avoid an even
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larger loss, but this causes the price to rise even
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more, which causes even more shorts to buy back.
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And this creates this kind of vicious cycle
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of price increases called a short squeeze.
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It's wonderful if you're just normally holding an
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asset, but it's a disaster if you're shorting.
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Sorry to interject, but I need to
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tell you a story about Piggly Wiggly.
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Seriously. Piggly Wiggly, the 1920s.
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This was a supermarket chain
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owned by Clarence Saunders.
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It was the first modern supermarket and successful enough
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for Clarence to build a big pink mansion.
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Anyways, the business was all over headlines
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for the wrong reasons, and Wall Street
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traders decided to short the stock.
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However, Clarence had a salmon-toned chateau to protect,
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so he fought back.
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He took out a $10 million loan to
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buy huge amounts of his own stock.
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He bought as much Piggly Wiggly as he could possibly
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get his hands on, and this drove the price from
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$39 to $124.
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It was a bold attempt at creating
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a short squeeze, and it almost worked.
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But the shorters got out by the skin of
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their teeth and Clarence sadly lost it all.
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So this kind of thing is unpredictable
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and brings massive risk to everyone involved.
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- Fun story.
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- Oh, hey, while you're helping out my girlfriend
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with that computer problem at your apartment yesterday,
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I put together this little animation.
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- Sure. ????
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- Yeah, it's crazy how her laptop seems to break every week.
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Anyways, let's say Bitcoin is at $20,000.
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You borrow one Bitcoin and sell right away for $20,000.
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If the price drops to $10,000, you'll happily buy it back,
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and give the Bitcoin back to the platform that
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you borrowed it from, giving you $10,000 in profit.
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But what if the price in
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our example had risen to $30,000?
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You'd still have the $20,000 from the sale,
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but you now need to find an extra
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$10,000 to buy back the Bitcoin you owe. Not good.
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You could buy it back and take a hit.
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Or maybe you'd wait for the price to drop again.
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That's shorting.
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Nice, dude. You're done.
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You're done, right? Okay.
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We can show the people how to actually do this.
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I'm going to be using Kucoin to show you how to do this.
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If you want to try them out, there's
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a discount link in the description below.
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Go ahead and try them out.
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When analyzing the market, you'll be looking
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for things that suggest that the price
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is going to tumble in the future.
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This could be some technical indicator, problematic
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news, rumors of regulatory changes, developmental issues,
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whale selling, china banning crypto for the 17th time,
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or anything, really.
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I'll cover some advanced profit taking
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techniques for this in a minute.
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But first, let's head over to Kucoin.
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The simplest way to short is with leveraged tokens.
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On Kucoin, you simply go to Trade > Spot trading.
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Now, this looks super intimidating at first, but you really
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only need to look at a couple of things.
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Click the asset up top and type in BTC3S
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This means you're buying a token
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that is three times short Bitcoin.
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Then, for the sake of simplicity, I'm
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doing a market order worth $100.
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Click Buy and you're good to go.
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Now, for every 1% Bitcoin decreases, I will
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make 3% or $3 on this $100 investment.
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If I purchased $3500 worth, I would
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have $10,500 in exposure to this market.
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And that means at just a $3,500 investment, if Bitcoin
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dropped 10%, I would actually make $1,050 in profit.
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But remember,
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and this is theoretically unlimited, so please be careful.
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And these are only meant to be
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held for 24 hours or less.
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But this is by far the easiest way to get started.
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For more advanced options, you can use the
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Margin account or Futures account on Kucoin.
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We're going to cover Margin.
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One this page, you can see the order book on the right.
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That's who's selling and who's
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buying this particular asset.
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The current price of Bitcoin is sitting right in
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the middle of that order book, around $20,000.
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Right now, the bottom right hand corner
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is where you carry out a trade.
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Make sure it says margin there
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if you're trying to short.
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Now, remember
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This means you pay an
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That rate can get expensive if you keep
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the position open for a long time.
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In order to simplify the borrowing process, make sure you
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check the box for Auto-Borrow and Auto-Repay.
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Now, in order to make a trade, you
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first need funds in your margin account.
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Do that by clicking the transfer
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icon and making the swap.
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I'm doing $100 for this example.
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Now we're going to the Sell tab in the bottom right.
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You can see the margin is currently set to 5X.
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So my $100 deposit shows $500 in USDT available.
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That's my buying power.
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Now, in order to short, we need to go
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over to sell Bitcoin, and this is in Bitcoin.
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So we have to bust out the calculator to figure
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out the specific dollar amount that we want to short.
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To do this,
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So if we wanted to short $100 worth, I would take
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100 divided by 20,645, which equals 0.0048 BTC.
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You then need to choose between
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Limit order and Market order.
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Let's say you see support here at $20,717 where you
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think it's going to touch before going down in price.
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You then enter that price where it says USDT
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and enter our Bitcoin amount of 0.0048 BTC.
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Click confirm, and here we can see
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the trade details and the interest charge.
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If Bitcoin doesn't reach that $20,717 price that
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you noted, this trade will not be executed.
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And you can see all your open
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orders in that tab down below.
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Using a market order is the opposite approach.
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This is useful when you think that the
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downward movement in price has already started.
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Maybe there was some news event or something that just happened
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that makes you want to get in in short ASAP.
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So choose market order and enter the amount
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of Bitcoin that you want to buy.
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Now when shorting, you want to
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make sure to protect yourself.
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If the price goes up too much,
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you can lose a ton of money.
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So you can limit your downside by placing a stop order.
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This will sell the position if it goes
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up to any specific price that you choose.
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Okay, let's say you've made a nice profit
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and it's time to close the position.
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How do you actually do this?
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The easiest way is with a market order.
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This time, instead of selling Bitcoin, you're going
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to buy it in the amount that you'd
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like to close the position on.
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If the Auto-Repay option is ticked,
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the system will automatically repay everything once
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it sees that you have enough funds.
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Or you can choose to repay manually.
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You do this by using the Replay
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button, choose Bitcoin, check the figures and
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confirm, and that's how you short Bitcoin.
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Now, to finish this off, let's cover a couple
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Here is the net unrealized profit chart for Bitcoin.
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This chart essentially tracks how much the average
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individual Bitcoin investor is in profit or loss.
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When the indicator turns red, the average
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holder is holding at a loss.
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For example, right now the average
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holder is actually down roughly 30%.
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But historically, whenever the line in this chart turns blue,
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which you can see at the very top of the
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peaks, it's a good time to think about shorting Bitcoin.
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The reason being it represents when the majority of
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holders are in a large amount of profit and
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what happens when so many people are in profit
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they start cashing out and the price of Bitcoin
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plummets as people escape the market.
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Now, the next indicator is a little bit more
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advanced, but when mastered and combined with technical indicators,
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this can provide some awesome insights as to when
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the best time might be to short.
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It's called the
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What it basically does is track the historical volume
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of an asset to provide you with important areas
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of interest where traders and investors tend to trade
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the most, where is volume the most heavy?
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These are marked by the arrows. See when an
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asset's price is currently trading in these areas,
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prices tend to stick in those zones for a
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while, and once they do break out, they like
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to move rapidly to the next area of interest.
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Now, when we throw the price chart on top,
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we can see just how quickly prices like to
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move from one area of interest to the next.
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Here's one of our Finova coaches, Kyle,
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explaining how he uses this chart in
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combination with other technical indicators.
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- And the moment that it does, this
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is when you can enter a short.
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Because not only are we breaking out of an area
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of interest where people like to trade, but we're also
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breaking out of a double top formation that's also bearish.
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Believe it or not, he actually does
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trade signals every day within our group.
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And this is in addition to daily coaching calls,
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research reports, and a massive community of successful investors
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that will be linked down in the description below.
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And we actually offer a seven day free trial if you wanna try it out.
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But it's just extremely important to
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understand the risks of shorting and leverage
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before you do anything crazy.
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So just please be careful.
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And if you're sitting there wondering about
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the technical indicators that Kyle just mentioned,
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I have just the video for you.
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On screen is my technical analysis
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for beginners completely free course.
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It actually just passed a million views, so
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just make sure you check that out next.
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I'd like to thank you so much for watching,
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and I hope you have a profitable day!
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