Short Selling the Bounce (LINK, THETA, BCH) and how to create a Market Neutral book

Following a bounce in altcoins that lasted a few days, crypto market is rolling over again, providing interesting Short Selling opportunities.

In this video, using real trades on Binance with LINK, THETA and BCH coins, we demonstrate:

1. How to create a “Market Neutral” book or portfolio with Short and Long positions, so that a sudden big move in the market won’t dramatically affect the expected outcome.

2. How to time Short Sell positions by identifying a downtrend, rejection at a resistance level or break below a support level, and/or a bearish inflection in momentum (MACD Histogram bars).

Traders must adjust to changes in cycle phases.  In a Downtrend, looking for long (buying) opportunities is like looking for a needle in a haystack and buying dips is like catching a falling knife, it’s swimming upstream.  The odds are against it.

Rule #1 in trading is “don’t fight the trend, trend is your friend, always trade with the trend”.  

What can a trader do to make money in a downtrend? Short Sell.  

That means doing the opposite of what we’d do in an uptrend. While in Uptrend, we buy dips, in a Downtrend, we Sell bounces.

In order for traders to be more versatile in any market, one must learn to Short Sell.

What’s Short Selling? Normally, traders buy low then sell high. Now reverse that – Sell high then Buy lower.

Watch video to learn how it’s done on Binance, and subscribe to our YouTube channel to get notified with additional upcoming video tutorials:

More recent blog posts:

Is this the bottom or just bear market rally?
How to trade a downtrend with Short Selling
Week 25 – winner and losers
Swing Trading
Crypto bear market? How to trade it?

Risk management – Stop Loss and trade size.  In all of these setups, traders should use Stop Loss orders to manage their downside risk, in case the trade goes against us, as it often will.  is about probabilities and even though these setups have a high win rate, one must be prepared to minimize losses on the trades that go bust.  If Stop Loss order types are not supported by they exchange, at least set up a price alert (see video).  Also, trade size should be such that you never risk losing more than 2% of your total equity.  Keeping the trade size small allows the trader to setup a wider Stop Loss, which gives the trade more room and time to complete with success.  Setting Stop Loss levels too tight can often result in getting knocked out of a trade prematurely.

Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as investment, financial, or other advice.  There are risks associated with investing in cryptocurrencies. Loss of principal is possible.