So you’re a bear? That’s not to say that your very mean on the Second Amendment; more that you think the price of Bitcoin will go down. How do you profit from this? Well, you need to short the market.
For those of you who don’t already know what shorting is, here goes;
1) Person A lends you 1BTC when the price is 400 USD
2) You sell that 1BTC to person B for 400 USD
3) The next day, the price falls to 390 USD. You buy 1BTC from person C for 390 USD
4) You pay person A that 1BTC that you purchased for 390 USD and you debt is cleared. You keep the 10 USD margin minus some interest on the loan (maybe 0.1% a day).
Okay, so how do you do that? Well, Bitfinex.com connects those who are holding BTC with those who wish to borrow it.
You’ll need a Bitfinex account with some funds in it. There are different ways to do this but it’s easiest to purchase BTC elsewhere and transfer them in.
Then you need to go to ‘manage wallets’ and ensure that your funds are being kept in your ‘trading wallet’.
From there go to ‘Margin Trade.’ Within ‘Margin Trade’ you’re looking to ‘Margin Sell’ which is the large red button to the right. The simplest way to to perform this operation is to select ‘Market’ as the order type from the drop down menu. This simply means that your order will be completed with the best possible price (limit allows you to set a price yourself).
This margin sell with by transferred to your ‘Market Positions’. When you wish to take your profit or cut your losses then simply click ‘close’. On a short position the ‘claim’ button is of no use to you.
I appreciate that this is very basic to most readers but it’s a good place to start. Any questions; please comment.