How to go short with AscendEX leverage

By enabling margin trading on AscendEX, traders can short crypto assets to profit from declining market conditions while amplifying potential returns through the use of leverage.

Nov 25, 2024 at 03:54 pm

How to Go Short with AscendEX Leverage: A Comprehensive Guide

Overview

Leverage trading allows traders to amplify their potential profits by borrowing funds from the exchange. AscendEX offers leverage trading for various crypto assets, enabling traders to take both long (buy) and short (sell) positions. Shorting a crypto asset involves selling it with the expectation that its price will decline, allowing the trader to buy it back later at a lower price and profit from the difference.

Benefits of Shorting with Leverage

• Profiting from Market Downturns: Leverage trading allows traders to capitalize on falling asset prices, enabling them to profit even in bearish markets.
• Hedging Risk: Shorting can be used to hedge against potential losses on other positions, reducing overall risk exposure.
• Leveraging Gains: Leverage amplifies profit potential, increasing the returns on successful trades.

Risks of Shorting with Leverage

• Liquidation Risk: If the price of the shorted asset rises unexpectedly, the trader may be forced to liquidate their position at a loss to cover their borrowing.
• Unlimited Losses: Unlike traditional trading, shorting with leverage can result in unlimited losses, as the price of an asset can theoretically rise indefinitely.
• Margin Calls: The exchange may issue margin calls if the equity in the trader's account falls below a certain threshold, forcing them to add more funds or close their position.

Prerequisites for Shorting on AscendEX

• Create an AscendEX account and complete KYC verification.
• Fund your account with sufficient crypto assets to cover the initial margin requirement.
• Choose the desired crypto asset to short.

Steps to Go Short with AscendEX Leverage

1. Enable Margin Trading: Navigate to the "Margin" section in the AscendEX interface and enable margin trading by agreeing to the terms and conditions.
2. Select Trading Pair: Choose the trading pair you want to short (e.g., BTC/USDT). The available leverage options will vary depending on the trading pair.
3. Determine Leverage Amount: Decide on the desired leverage amount. AscendEX offers leverage options ranging from 2x to 50x. Higher leverage increases potential profits but also amplifies risks.
4. Place Sell Order: Enter the desired quantity of the asset you want to short and select the appropriate leverage. Remember that you are effectively selling the underlying asset.
5. Manage Position: Monitor your position closely and adjust leverage or close the trade if necessary. Shorting with leverage magnifies fluctuations in asset price, so it's crucial to manage your risk accordingly.
6. Buy Back and Close Position: When the price of the asset reaches your target profit level or loss limit, buy back the shorted asset to close the position. The profit or loss on the trade will be credited or debited from your margin account.
7. Repay Borrowed Funds: Once the position is closed, you must repay the borrowed funds to AscendEX. The remaining equity in your margin account will be released.

Example of Shorting with AscendEX Leverage

Consider the following example:

• Trading Pair: BTC/USDT
• Leverage: 10x
• Short Sold Amount: 1 BTC
• Initial Margin Requirement: 1 BTC / 10 = 0.1 BTC

If the price of BTC falls by 10%, you will profit 0.1 BTC x 10 = 1 BTC (excluding leverage costs). However, if the price of BTC rises by 10%, you will lose 0.1 BTC x 10 = 1 BTC.

Additional Tips

• Set stop-loss and take-profit orders to automate trade execution based on predetermined price levels.
• Manage leverage carefully and avoid overleveraging your positions, as this can significantly increase your risk of liquidation.
• Monitor market conditions closely and make informed trading decisions based on technical and fundamental analysis.
• Consider using a trading simulator to practice shorting with leverage in a risk-free environment.