The price action and value of cryptocurrencies is an impossible thing to predict. Although the bullishness of an asset price is a joy for every investor, a fall in price is certainly inevitable.
However, in bearish sessions, shorting an asset is an ideal trading strategy to make profits from falling asset prices.
Shorting an asset means selling an asset at a relatively higher price with speculations of buying the asset back at a lower price.
Shorting in a bearish market is an excellent way to mitigate the loss of a trader from price fall. However, it is important to consider sound price analysis before delving into shorting an asset.
Ways to Short Ethereum on Kucoin
Shorting assets on Kucoin is straightforward, especially with its beginner-friendly and easy-to-use interface.
Established in 2017, Kucoin is a Hong Kong-based cryptocurrency exchange platform. It is one of the notable and most popular exchange platforms that provide centralized trading access to hundreds of crypto assets.
In addition to this, the platform offers exclusive DeFi services with an extremely low trading fee.
In Kucoin or cryptocurrency exchange, shorting any asset can occur in two ways:
- via Futures Trading
- via Margin Trading
The only difference between both of them lies in the ownership of trading assets. Let’s take a look at each of these Kucoin shorting methods.
Steps to Short Ethereum via Kucoin Futures
Kucoin Futures is an advanced trading platform for experienced traders to leverage futures contracts for eligible assets.
It allows traders to conveniently sell assets at a higher price and buy back at a lower price.
An excellent feature of Kucoin futures is the availability of sophisticated trading and analytical tools. Meanwhile, it has a beautiful and intuitive interface that makes it easier to execute trades.
In Kucoin Futures, assets are traded in USDT or Coin margined pairs of USDT, BTC, or ETH only.
To short Ethereum on Kucoin, you must log in to your Kucoin exchange account and fund your account with USDT. Afterward, open and set up a Futures account before shorting your Ethereum coins.
Here’s how to short Ethereum on Kucoin Futures Trading
- Log in or Sign Up to Kucoin
- Verify your account
- Fund your account with USDT
- Open Kucoin Futures Trading account
- Execute your short order
1. Login or Sign Up to Kucoin
Before you can short Ethereum on Kucoin, you must open and verify a new account with Kucoin.
Kucoin is available on mobile app stores for Android or iOS devices. You can also navigate to Kucoin.com and open an account.
After downloading and installing, open the app and tap the profile icon on the top left corner of the home screen.
Click login if you have an existing verified Kucoin account. Otherwise, tap ‘SIGN UP’ from the top right corner.
On the sign-up page, input your email address or phone number, then choose a strong password before clicking ‘CREATE ACCOUNT’.
Complete CAPTCHA and verify your email address/phone number with the six-digit verification code sent to your inbox.
2. Verify your account
After verifying your mail, you can now verify your identity before using Kucoin. Note that you need to verify your identity before purchasing any cryptocurrency or trading on Kucoin.
To do this, tap the profile icon and then the UNVERIFIED badge from your profile menu to go to the verification page.
On the verification page, you can start with basic verifications by supplying your Name, Country, ID type, and ID number. Then submit the details.
Proceed by tapping ‘CONTINUE ADVANCED VERIFICATION’ to submit a selfie and a clear copy of your ID card. Once the documents have been approved, you will gain full access to Kucoin.
3. Fund your account with USDT
After account verification is complete, you can fund your account and start trading.
To fund your account, tap ‘BUY CRYPTO’ from the home screen. Choose USDT from the token list.
Input the amount of USDT you want to buy and click ‘BUY USDT’ to supply your payment details and execute the transaction.
Once the transaction is complete, the purchased USDT will reflect in your wallet.
4. Open Kucoin Futures Trading account
To start Futures trading, go to ASSETS > Futures from the bottom right corner of the home screen.
Tap ENABLE NOW > ENABLE FUTURES TRADING to activate your futures trading account.
From the navigation bar, click FUTURES and search for ETH from the asset list. Click on the ETH futures trading asset to go to its trading page.
On the trading page, you can choose order types, including Limit, Market, Stop Limit, and Stop Market.
You should also choose suitable leverage for your trade. Leverages allow you to trade a large amount of asset with a small amount of money. Ensure you do not overleverage.
5. Execute your short order
Once you’re satisfied with your preset values, enter the amount of Ethereum you want to short and tap ‘SELL/SHORT’.
Your order will be executed immediately. The order will be filled once it hits the entry price.
Sound trade and risk management are important in Futures trading. Knowing when to take profit and stop loss can save you from unnecessary liquidation.
To set stop loss in Futures trading, tap the ellipsis on the top right corner for trading options. Then go to PREFERENCES > FEATURES.
Under ‘Place Order’ options, toggle the button for ‘Take Profit & Stop Loss’ to activate both of them in your trading interface.
Go back to the trading interface and set your Take Profit and Stop Loss prices.
Steps to Short Ethereum on Kucoin Margin Trading
The main difference between Futures and Margin trading is that in Margin Trading, traded assets are borrowed. Therefore, instead of using your own assets in Futures, you borrow and repay in Margin.
Margin trading is another common asset shorting method. It is a trading strategy where traders maximize return on asset trading by leveraging on borrowed assets.
Although leverage allows traders to maximize profit from a trade, overleverage can cause asset liquidation in the long run.
In Margin trading, if you are bearish on an asset and want to go short, all you have to do is provide collateral and borrow an asset. Then, leverage the asset, secure profit, and return the asset you borrowed.
Margin trading is a brilliant idea as it allows traders to keep their assets from market risk. The only asset facing risk is the borrowed one.
Here’s how to short Ethereum with Kucoin Margin trading:
- Log in to your Kucoin account and set up a Margin trading account
- Fund your account with USDT
- Provide collateral in USDT
- Borrow ETH asset
- Execute your short order
- Repay your debt
1. Log in to your Kucoin account and set up a Margin trading account
To short Ethereum on Kucoin Margin, open your Kucoin app and go to ‘TRADE’. In the trading section, you can switch between Spot, Margin, Grid, and Fiat trading.
Tap ‘CROSS MARGIN’ to switch to the Margin Trading account. Then choose ETH/USDT from the tradeable asset list.
Follow the on-screen instructions to get familiar with different parts of the Margin trading interface.
To get started, tap ‘ENABLE MARGIN TRADING’. Accept the Terms and Conditions and confirm ‘ENABLE MARGIN TRADING’.
There are two main modes you can use when trading with Kucoin Margin; the Isolated and Cross Margin mode.
The Cross Margin has a maximum leverage of 5x. In this mode, you cannot borrow more than four times their Cross Margin balance.
However, with the Isolated margin, traders can enjoy up to 10x leveraging and can borrow up to 9x the assets available in their Isolated Margin account.
You can switch between Isolated and Cross Margin mode in the upper part of your Margin account.
2. Fund your account with USDT
As mentioned earlier, Margin trading deals with borrowing assets to execute trades. However, before you can borrow assets, you must provide collateral.
To provide collateral in USDT, go back to your Kucoin homepage and tap ‘BUY CRYPTO’. Choose USDT as the token you want to buy and input the amount of the token you want to buy.
Tap ‘BUY USDT’ and supply your payment details. Complete 2FA verifications to complete your transaction.
3. Transfer collateral to Margin account
Once your account is funded, you can transfer the USDT tokens as collateral to your preferred Margin trading mode.
To transfer the collateral, go to assets and tap Transfer. Choose USDT as the token you want to transfer and choose the preferred destination margin account.
If you’re using the Isolated margin mode, select ETH/USDT as the pair you’re providing collateral for.
Specify the amount of USDT you want to transfer and tap ‘CONFIRM’.
4. Borrow ETH asset
Once your collateral is in your Margin account, go back to Trade > Margin.
In your margin account, tap the ellipsis to expand options. Click ‘BORROW’.
Since you’re shorting, you need to borrow ETH so that you can sell the ETH for USDT at a higher price, then buy the ETH back with USDT at a lower price.
Choose ETH as the token you want to borrow. Set appropriate leverage and input the amount of ETH you want to borrow.
You can also tap ‘maximum available’ to the input max amount of ETH you can borrow. Finally, tap ‘CONFIRM’.
5. Execute your short order
Now that you’ve borrowed the asset you want to trade go back to your Margin trading account and switch to SELL.
Set your trading leverage and choose the preferred market order between Limit, Market, Stop Limit, and Stop Market.
Enter the amount of ETH you want to sell and tap SELL/SHORT ETH. Once your order has been filled, you will find it in ‘Open Orders.’
6. Repay your debt
You can only repay with the asset you borrowed. After the price has gone down as speculated, you can now sell your position to buy back ETH at a lower price.
When you buy back at a lower price, you can then repay your liabilities and keep the profit from the trade.
Once you’ve regained the ETH, tap the ellipsis on the top right corner of your Margin trading account and click on REPAY.
Input the amount of all the liabilities you owe and tap REPAY.
Shorting an asset gives you an edge in the market since asset price goes both up and down. It gives traders the chance to make a profit on both sides of the market.
Shorting is ideal if you believe a crypto asset’s price will fall. However, it is important to make your assumptions based on a sound technical and price analysis.
Also, ensure you have proper risk and money management in place to reduce your loss and manage your assets. You may consider using DCA (Dollar Cost Averaging) to enter a position. Do not leave out your Stop Loss and Take Profit too.