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1. The liquidation threshold is the point at which your collateral is sold to repay the loan. It’s calculated as follows: (collateral value / (loan amount + accrued interest)) x 100.
2. Whether anything left over from the automatic sale of your collateral is returned to you.
Short selling is a high-risk trading strategy that involves borrowing an asset you believe will fall in price and then pocketing the difference when you repay.
For example, if you borrow an asset worth $1,000 and then sell it on the market, you have $1,000. If that asset falls to $900, you can then buy it again at the lower price, repay the lender, and keep the $100 difference.
However, if your prediction is wrong and the asset increases in price, you’ll have to pay more to repay the asset. This can result in some fast and significant losses if you’re not careful.
MyConstant can lend you crypto through three pairs:
To short any of these cryptocurrencies, you must first top up your chosen pair’s balance.
If you already have USD, it’s as simple as transferring it from your available balance to your chosen short-selling balance. Otherwise, you’ll need to deposit first.
Next, you choose how much of your chosen crypto you want to short. Remember – your collateralized USD is at risk if the crypto increases in price, so only short what you can afford.
You then need to set a stop loss and take profit limit. These are lower and upper price limits of the crypto that can help you secure profits and minimize losses.
With these values set, you’re ready to hit the “Short Crypto Now” button.
It’s then a matter of waiting to see how the market behaves – will your bet pay off? We hope so!
You can wait until you hit your “take profit” limit or manually repay your crypto whenever you like, as either USD from your available short-selling balance or as crypto from your coin balance.
However, if the price of your shorted crypto rises, your collateral will be at risk. Once your collateral value falls to 105%, it’s sold and you lose it.
Your take profit price is the price at which you repay your shorted cryptocurrency.
You set a price lower than the current market price and when the market hits that level, you repay your shorted cryptocurrency and keep the profits.
For example, let’s say you’re shorting bitcoin. It’s current price is $50,000. If you believe it will fall 10%, you’d set your take-profit price to $45,000.
When bitcoin’s price hits $45,000, you repay the borrowed cryptocurrency in its equivalent value in USD from your short-selling balance. You keep the profits minus the matching fee and interest rate.