How to Sell Short in Inverse Futures Contracts

How to gain profits through opening sell-short positions when the price goes down?

Suppose that you have 1 BTC and sell/short 10 BTC using 10X leverage in BTCUSD trading market. When the price of BTC drops from 15,000 USD to 14,000 USD, your PNL is calculated as follows:

10 * (15,000-14,000)= 10,000 USDT

If you trade in spot markets with your own assets, you can only buy low and sell high instead of selling short.

Position Amount Opening Price Closing Price PNL
10 BTC 15,000 USD 14,000 USD

The amount of BTC equivalent to 10,000 USD

Note: To simplify the calculation of the above process, the calculation of premium, margin profit and loss, transaction fees, and capital fees are ignored.

 

Take Cross position with 10X leverage to sell short in the BTCUSD futures market as an example:

1. Enter the Futures trading page

(1) Visit CoinEx official website (https://www.coinex.com), click [Futures] on the navigation bar, click [Inverse Contract] and select the Futures trading pairs.

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(2) After entering the contract trading page, select the contract trading market.

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2. Transfer the assets to Futures account

Click [Transfer], select [From Spot to Futures], select [BTC], enter the [Amount], and then click [Submit] to complete the transfer.

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3. Set the margin mode and adjust the leverage

Take Cross Margin mode and 10X leverage as an example:

Select [CrossMargin] mode and [10X] for leverage.

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4. Open a position/sell BTC at a higher price

Take limit order as an example:

(1) Set the [Price] and [Amount] in the BTCUSD contract market and click [Sell BTC] to complete the order.

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(2) The sell/short will be completed when the order is executed, and you can view the position details in the [CurrentPosition].

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5. Close the position/buy BTC at a lower price when it drops to the expected price

(1) Method 1: Close positions in the order placement area.

Take limit order as an example here:

Set the [Price] and [Amount] in BTCUSD contract market and click [Buy BTC] to complete the order. When the order is executed, the position will be closed/buy.

Note: When closing a position through the order placement area, if you want to completely close the position, the order amount must be the same as the position amount. If it is greater than the position amount, the position will be held in the opposite direction after the order is executed.

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(2) Method 2: Close the position at the current position.

Take limit order as an example:

Set the [Price] and [Amount] on the BTCUSD contract market, and then click [Close Position] to complete the delegation. When the order is executed, the close/buy will be completed.

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(3) Method 3: Use [Close All], [Take Profit or Stop Loss] to close the position.

When a position is closed by [Take Profit or Stop Loss], [Close All] on future trading, the closing order will be executed with the Auction-Style Liquidation Strategy.

For more details, please refer to:

Auction-style Liquidation Strategy

Take Profit & Stop Loss in Futures Trading

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6. Transfer the assets to the Spot account

Click [Transfer] on Futures trading page, select [From Futures to Spot], select [BTC] coin, enter the [Amount], and then click [Submit] to complete the transfer.

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Risk Reminder

Futures Contract Trading not only allows you to magnify gains with fewer funds, but can also saddle you with amplified losses, when the market moves against your prediction. Therefore, we strongly advise entry-level users NOT to use high-leveraged trading to avoid forced liquidation or even bankruptcy.

 

Related articles:

Futures Trading Risk Reminder

FAQ About Futures Contract

CoinEx Inverse Futures Contracts Trading Rules

What’s Futures Index Price

What’s Futures Mark Price

Futures Trading Fee

What's Futures Forced Liquidation

How to Calculate Contract PNL

How to Set Different Futures Order Types

What Are Maker & Taker

Use CET as Trading Fee

What are the Differences Among Spot Trading, Margin Trading and Futures Trading