DigiFinex Contract Short Selling Tutorial

Short selling on DigiFinex involves borrowing crypto assets, selling them at a higher price, and buying them back later at a lower price, enabling traders to capitalize on downward price movements in the highly volatile cryptocurrency market.

Nov 24, 2024 at 09:28 am

DigiFinex Contract Short Selling Tutorial: A Step-by-Step Guide

Introduction

Short selling, a trading strategy that allows traders to profit from a decline in the price of an asset, is widely used in the unpredictable world of cryptocurrencies. Among the various platforms offering this feature, DigiFinex stands out with its user-friendly interface and competitive rates. This comprehensive tutorial will guide you through the process of short selling contracts on DigiFinex, empowering you to capitalize on downward market movements.

Step 1: Understanding Short Selling

Shorting Crypto Contracts
Short selling involves borrowing an asset, selling it at a higher price, and buying it back later at a lower price to return to the lender. In the case of DigiFinex contracts, you're essentially betting against the price of an underlying cryptocurrency, anticipating its decline.

Key Concepts

• Margin: Collateral you provide to borrow the asset.
• Order Type: Specify "Short" when placing your order.
• Leverage: Amplifies your potential profits but also your losses.

Step 2: Opening a DigiFinex Account

Create an Account

• Visit the DigiFinex website and sign up for an account.
• Verify your email address and complete KYC procedures.

Fund Your Account

• Navigate to the "Finance" tab and deposit funds into your USDT account.
• USDT is the stablecoin used as margin for DigiFinex contracts.

Transfer Funds to Margin Account

• Click "Transfer" and allocate the desired amount of USDT to your margin account.

Step 3: Choosing the Right Contract

Contract Selection

• Decide on the cryptocurrency pair you want to short.
• Consider market conditions and your risk tolerance.

Contract Details

• Each contract has specific terms: size, leverage, and expiration date.
• Select the contract that aligns with your trading strategy.

Step 4: Placing a Short Order

Order Form

• Navigate to the "Contracts" tab and choose your preferred contract.
• Specify "Short" as the order type.
• Set the leverage, quantity, and price.

Order Submission

• Double-check your order details.
• Click "Sell" to place the order and initiate the short position.

Step 5: Monitoring and Managing Your Position

Real-Time Tracking

• Monitor the performance of your position on the "Positions" tab.
• Track the profit/loss, liquidation price, and collateral usage.

Risk Management

• Adjust your leverage or add more margin if needed.
• Close your position to take profit or cut losses.

Step 6: Closing a Short Position

Profit Taking

• When the price of the underlying cryptocurrency falls, your position will show a profit.
• Click "Close" to sell your short position and lock in your earnings.

Loss Mitigation

• If the price rises, your position will show a loss.
• Minimize losses by "covering" your position, buying back the same amount at a higher price.

Step 7: Additional Considerations

Trading Fees

• DigiFinex charges trading fees for opening and closing contracts, as well as for swaps.
• Familiarize yourself with the fee structure to minimize costs.

Market Volatility

• Crypto markets are highly volatile, increasing the risk of large, sudden price movements.
• Use stop-loss orders and manage your leverage wisely to mitigate risks.

Customer Support

• DigiFinex provides 24/7 customer support via live chat and email.
• Don't hesitate to reach out for assistance if needed.