How to short at Bitfinex.com using Limit Sell and Trailing Stop-Loss orders

While Bitcoin is going to a bubble zone, and many dummies are still sending their money to exchanges buying BTC, smart traders are already in BTC since $120 and they are looking for a moment to take profits.

Once they start taking profits, BTC growth will slow down and then as usual, we will see a double or tripple top with extremely high volume, before Bitcoin will go down hard.
I don't know how deep it will dive, it's unpredictable now, but markets always go down after they were pumped hard. Now Bitcoin market is still bullish but it's very late bullish stage.

So people probably will find this manual useful when the bullish market will switch to bearish.

Before reading this manual, please read

How to earn money using Margin Trade at Bitfinex.com

Also please read the DISCLAIMER. Beware trading is a risk. Shorting at bullish market while catching up the corrections is much greater risk than a regular trading.

But using short trades you can benefit on bearish market if you understand what you do.

1. Move some USD to Margin Trade page, in my case I use 1000 USD to go short. I'm doing this on the retracement to prepare this manual before the trend reversal.

2. Wait for a clear pattern of the bullish trend reversal. I usually use #doubletop or #trillpetop patterns and sell only after the second or third peak reached.

3. Go Margin Trade page and sell some Bitcoins slowly. Always use Limit order. Limit means you will only sell above the price you set. In my case I use limit sell order by 328.

3. If you see your understanding of the market conditions is right than sell more

4. If the price is still not going up on the 2nd or 3rd peak than sell more.

5. Just to show you my balance so far. When you sell, your unrealized P/L will probably be negative first due to the trading fee. It's the lowest at Bitfinex, 0.12% only. Your P/L will become green when price will go down.

6. Now it's time to set stop-loss orders. Always limit your losses. If you open your position at the right time and in the right direction it will go to profit zone fast. But if you are wrong, better let your stop-loss orders to limit your losses.

7. In my case I use Trailing Stop-Loss order by 3. It means that the price of stop-loss will be automatically determined by the exchange as the price of the latest peak + $3.  Current peak is at 328.79, so my stop-loss point will be determined by the exchange as 331.79.

8. Some transaction was executed at 328.5. Somebody set sell order at this level and it was bought. So now you see my Trailing Stop order has changed its price to 331.5. And because I see my understanding is right, I sell more.

9. Now the amount of my short position is 5 btc, which is 1640 USD. I have only 1000 USD on the balance buy I use a leverage.

10. I'm increasing my short position to 6 BTC (~1968 USD). So far it's not profitable yet as the price is not going down enough, but I'm calm because I have set a stop-loss order. But as you can see it goes down slowly and my stop-loss orders change the price.

11. Price is going down more.

12. And more.

13. My trailing stop-loss orders are already changed to 329 automatically. So now even if stop-loss orders will trigger I will be with small profit.

14. Price is going down more and my profit is increasing. My stop-loss orders are moving lower automatically.

So finally my stop-loss orders were triggered automaticaly and closed my short position with aprox. 3% profit.

I did this short to prepare this manual on a bullish market. But one day a reversal will come for sure and that time you may find this manual useful.

How to earn money using Margin Trade at Bitfinex.com

1. Read the disclaimer. And remember, trading is a risk.
Using this manual you can earn your money 4 time faster if you do it smart or you can lose your money 4 times faster if you don't understand what you do.

2. Why Margin Trade is better than a regular exchange?
– If you are in BTC, you still can buy Bitcoins if you expect the price to go up
– if you are in USD, you still can sell Bitcoins if you expect the price to go down
– you can make profit on both bullish and bearish market
– you can use 2.5:1 or 4:1 leverage at Bitfinex.com
– you can use automated stop-loss orders so you can sleep well if you have an open position

3. What is the difference between Margin Trade and a regular exchange?
With Margin Trade you don't buy Bitcoins for USD you have on your balance and don't sell Bitcoins you have on your balance.
Instead you use your balance as a guarantee and you buy/sell the funds you borrow. This allows you to use a leverage.
If you expect Bitcoin price to go up, you borrow USD and buy Bitcoins. Then the price go up and you sell your Bitcoins higher and return USD you have borrowed keeping the profit.
If you expect Bitcoin price to go down, you borrow Bitcoins and sell them. Then the price go down and you buy your Bitcoins lower and return BTC you have borrowed keeping the profit.

4. Some terms
Going long – buying Bitcoins and waiting for the price to go up
Going short – selling Bitcoins and waiting for the price to go down
Opening long position = BUY
Closing long position = SELL
Opening short position = SELL
Closing short position = BUY

5. How to start? Login to Bitfinex.com, deposit some money there and go to Margin Trade page

6. Check the charts and the orderbook, decide are you expecting the price to go up (go long) or go down (go short).

7. Decide your entrance price and the margin percent you expect to get. In our example we will go long starting from 117.25 and ending at 125 with x4 leverage. To do such trade you just have to have 0.5 btc on your balance.

8. Check the maximum leverage you want to use in your account settings. As mentioned, in our example we have 0.5 btc on balance and 4:1 leverage, so we can play with 2 btc volume.

9. Check your indicative rate as shown on the screenshot. You can also limit it. If the daily indicative rate is higher than your expected daily margin than it doesn't make any sense to open a position.

10. Submit Limit Buy order (Limit means you will only purchase at the specified price) and Stop order. Stop order is important if you were wrong in your estimation of the current market conditions. It will execute once the price reaches the level you set in the Stop order. We set stop loss at 115.

11. As a result you will see your orders bellow. Wait until your limit buy order executed.

12. Once your limit buy order is executed, you will see it in your active positions. You will also see P/L and Swap. P/L is the current profit or losses of your positions. Bitfinex calculates it automatically based on the orderbook. Swap is the interest you pay for your loan.

13. Then set up your sell order at your target price

14. After this you will only see your Stop and Limit Sell order at your active orders list.

15. Wait for the price to go up as you expect for your LONG position or to go down in your SHORT position.

16. Wait more 🙂

17. And more 🙂 Here if you doubt the price will go up more you can move your Stop order higher. So if the price goes back down your Stop order will close your position with the profit. However you can close your position any time you want pressing "Close" link.

As you can see we have made $10 with only 0.5 btc! It's 20% of profit!

We wish you successful trades!

And here are some rules we use (they may be useful for you as well):
1. Open a position only if you are sure (as much as possible) the price will move as you expect. Don't buy/sell too much if you are not sure
2. Never try to go against the market
3. Don't jump in on a big green candle – wait for the correction.
4. Don't buy on a big red candle – red candles come with friends
5. Better wait while the price has already started to go up before buying in order to be sure
6. Sell when the price has already started to go down after a big growth in order to be sure