ByBit: Strategies on Leverage Trading

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How to make an excellent “SHORT” strategy

Making a great short strategy depends on your level of risk aversion. Here are a few typical examples:

Trends catching/following strategy

Trend Following is a trading practice that aims to capture trends across all markets, using proper risk management. This methodology works because emotions, greed, and fear are one of the driving forces behind markets. A trend will occur when one side is in control, and those who follow trends can profit from this occurrence.

American stock trader Jesse Lauriston Livermore believes that there are repeating patterns in price movement. He said that they are recurring patterns that appear over and over, with slight variations. Livermore reasoned out that markets are driven by humans, and human nature never changes.

Breakouts swing strategy

Breakout trading can be exciting but can also be painful. It is exciting because most of the time, breakouts make price quickly move in your favor. However, if the price does a 180-degree reversal from what you expect, it will result to a great loss. Ouch!

A breakout strategy seeks to enter a trade as soon as the price succeeds in breaking out of its range. Strong momentum is what traders are searching for, and the real breakout is the signal to enter the position and profit from the market action that follows.

Trading positions can be taken at market, which requires close attention to price movement, or by putting buy stop and sell stop orders. Typically, they will set the stop just above the previous support level or below the last resistance level. Traders may make use of traditional support and resistance levels to determine their exit targets.

Breakdown swing strategy.

The opposite of a breakout strategy is a breakdown strategy. You enter a trade early in a downtrend while waiting for the price to “breakdown” (also known as a downside breakout). As soon as a price breaks through a crucial support level, you enter a position.

Fading trading strategy.

Fading strategies involve placing trades against the current trend in order to profit from a reversal. For instance, if a coin’s price is particularly high, a trader can open a short position in the hope that the price will drop again. Or, if a coin’s price is unusually low, a trader might make a long trade.

Three underlying presumptions support the fading strategy:

  • Overbought at the current price (or oversold).
  • Early buyers (or sellers) are ready to reap rewards.
  • There may be risk for current holders (or short sellers).

Technical indicators, such as the Relative Strength Index, are frequently used to identify overbought or oversold positions (RSI). As early buyers (or sellers) take profit off the table, momentum may start to shift. Additionally, these developments can prompt current holders (or shorts) to reevaluate their holdings. 

These coinditions are frequently made worse by a particular tipping point, like an earnings report. Other traders may buy the coin in response to an optimistic earnings announcement, but eventually this reaction becomes over-extended, and a mean-reversion occurs.

You can also read our previous article on Bybit and Leverage Trading – Introduction to Bybit and Leverage Trading

To learn how to trade on Bybit step-by-step, click on the link below:

Bybit is a great platform for seasoned cryptocurrency traders seeking for an exchange with more advanced features. There are many user-friendly exchanges with straightforward interfaces available right now to help new investors get started in the cryptocurrency market, but such are typically not suitable for serious traders.


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