How to go short with leverage on DigiFinex

On DigiFinex, traders can leverage their positions to amplify profits, particularly in bearish markets, by borrowing assets to sell short and repurchasing them later at a discount.

Nov 24, 2024 at 08:54 pm

How to Go Short with Leverage on DigiFinex

DigiFinex, a well-established cryptocurrency exchange, offers users the opportunity to leverage their positions, allowing them to increase their potential profits. Going short with leverage involves borrowing an asset to sell in the market with the expectation of buying it back at a lower price to return to the lender, thereby profiting from the price difference. This strategy can be particularly lucrative, especially during market downturns, as it allows traders to capitalize on falling prices.

Benefits of Going Short with Leverage

• Increased profit potential: Leverage magnifies the potential profits from a trade, allowing traders to make significant gains, even with a small initial investment.
• Downside protection: Shorting with leverage allows traders to place stop-loss orders to limit their potential losses, even when the market moves against them.
• Diversification: Shorting provides traders with additional hedging strategies to reduce their overall risk exposure.

Prerequisites

1. Open a DigiFinex Account: Register for a DigiFinex account and complete the necessary verification procedures.
2. Fund Your Account: Deposit sufficient funds into your DigiFinex account to cover both the margin requirement and the potential losses.
3. Choose a Trading Pair: Select a trading pair, such as BTC/USDT, that you believe will decline in value.

Step-by-Step Guide

1. Select the Perpetual Contract: Navigate to the "Perpetual" section of DigiFinex and choose the desired trading pair.
2. Choose the Margin Mode: Select "Cross Margin" or "Isolated Margin" depending on your risk tolerance.
3. Determine the Leverage: Choose the desired leverage level. DigiFinex offers leverage options ranging from 1x to 100x.
4. Check the Margin Requirement: Calculate the margin requirement based on the contract value and the chosen leverage.
5. Place a Short Order: Input the desired short position size and confirm the trade details. DigiFinex will borrow the asset from the exchange and sell it on your behalf.
6. Manage Your Position: Monitor your short position regularly and place stop-loss orders to protect your profits.
7. Close Your Position: When the market price falls to your desired level, close your short position by placing a buy order. DigiFinex will automatically purchase the asset and return it to the exchange.

Risks of Going Short with Leverage

• Magnified losses: While leverage increases potential profits, it also increases the potential for losses, as losses are also multiplied.
• Margin calls: If the market moves against your position and the margin requirement is not met, DigiFinex may issue a margin call, requiring you to add additional funds or close the position.
• Liquidation: If the margin call is not met, your position may be liquidated, resulting in the loss of your initial investment and any profits.

Conclusion

Going short with leverage on DigiFinex can be a powerful tool for experienced traders seeking to profit from market downturns. However, it is crucial to understand the risks involved and to use leverage cautiously. By following the steps outlined above, traders can effectively implement shorting strategies on DigiFinex and potentially enhance their trading returns.