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Bitcoin is a highly volatile asset. Swings can be big and aggressive. If you can time the market, there is money to be made.
If you long Bitcoin by trading on leverage (margin trading), you can profit when the price of Bitcoin increases. This also provides the opportunity to increase the size of your trades using leverage.
What is longing Bitcoin
When you long Bitcoin you essentially open a bet on the fact that you think the price of Bitcoin will increase. If the price of Bitcoin does increase, you’ll profit. If it drops instead, you’ll make a loss.
How does it work?
The whole process is quite simple. To fund your long you will use some of your own funds and some borrowed funds. By pooling these funds together you will buy Bitcoin.
Once you’ve bought Bitcoin, the aim is to sell the Bitcoin you bought for more than you bought it for. If you can, you’ll make a profit. Once your trade has closed you’ll have to pay back the borrowed funds in full, regardless of the trade outcome.
Alternatively, if the market price falls, you’ll only be able to sell the Bitcoin for less than you bought it for. In this case, you’ll make a loss.
How does leverage work?
Leverage is the amount that you will borrow in order to execute your trading position. Leverage is calculated as a proportion of the size of your trade.
If open a 1 BTC long with 2x leverage you will be borrowing 0.5 BTC from the exchange and the other 0.5 BTC will be from your wallet.
If you use 10x leverage for a 1 BTC long you will only need 0.1 BTC from your end and the rest will be borrowed.
Leverage allows you to increase the size of your position using your existing capital. However, since your position is larger, you are more exposed. Risks are larger, so you have to be more careful. Always make sure your risk management is on point.
How to long Bitcoin
- Choose the size of your trade (eg 1 BTC).
- Select the leverage amount you wish to use.
- Enter the price at which you would like to enter the long position. Once your order executes, you’ll buy Bitcoin at your chosen price.
- If the price goes up, you can close your position which will sell your Bitcoin and keep the profit. If price goes down, you can sell the Bitcoin at a loss.
That’s the basics of how to long Bitcoin. Now let’s look at an example and then we’ll walk you through how to open a long on Liquid.
The price of Bitcoin is 10,000 USD.
You open a 1 BTC long with 10x leverage at 10,000 USD, using BTC as your funding currency.
1,000 USD is taken from your account as margin and the remaining 9,000 USD is borrowed from the exchange.
The price of Bitcoin rises to 11,000 USD and you close your position. The 1 BTC is now worth 11,000 USD, a 1,000 USD difference. Of course, you must return the 9,000 USD you borrowed. From the 1,000 USD profit you will pay trading fees and a small amount of interest. Once that’s covered, the remaining profit is all yours!
How to long Bitcoin on Liquid
First, head to the margin trading section of Liquid.
Select the BTC/USD pair.
In the order form on the right select Long.
Next, choose whether to use Limit, Market, Stop, or Trailing Stop for your order. If you need more details on what each order type means, you can learn more here. The most common choices are Limit or Market.
Enter your position size (and entry price if you are using a limit order).
Next pick the leverage you would like to use.
Finally, choose your funding currency. This allows you to choose which of your funds you use as margin for your trade.
Once you submit the order it will move into the orders tab.
When the order is filled, your position will be live. It will then be reflected in the positions section. Congratulations! You have successfully opened a long on Bitcoin.
Now that your position is live you can set your levels for stop loss and take profit.
If you want to close your position, hover over the dotted lines on the left of your position and choose either close or claim.
Closing a trade by "claiming" the position means you deposit in a fiat or crypto amount equivalent to your loan to buy or sell off the trade, turning it into a spot trade.
That’s it! Your first Bitcoin long is complete.
Price of Bitcoin going down? Learn how to short Bitcoin.
This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money, particularly if you trade on leverage. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to lose.
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