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2795715 No.2795715 [Reply] [Original]

>he's not HODLing and short at the same time

It's like you don't want a smooth equity curve

>> No.2795756

If it's possible for people to do this, then everyone should be. Be like a hedge fund, biz.
http://www.investopedia.com/terms/n/net-exposure.asp

>> No.2795760

>>2795715
Didn't know what I was doing had a name

>> No.2796373

>>2795715
You know that's the exact same thing as selling, and buying back, right?

Proof:

Scenario A: Sell and buy back
>Start with 1 share, and zero cash
>sell, now you have 0 shares, and $10
>price goes down to $5
>buy back the share
>now you have 1 share and $5 dollars

Scenario B: HODL and short
>Start with 1 share, and zero cash
>short 1 share @$10
>cover position at $5
>now you have 1 share and $5 dollars

Q.E.D.

And actually you'd need a certain amount of money to short depending on the exchange, and you'd also be paying interest on the coins you're borrowing, so it doesn't make any sense to HODL and short.

>> No.2796418

>>2796373
that's assuming the price goes down lol

HODL: profit if price rises, not necessarily lose if it falls

short: profit if price falls, DEFINITELY lose if it rises

>> No.2796440

>>2796373
also I'm pretty sure he means he's allocating a HODL fund apart from his shorting, "HODL and short" isn't a single action

>> No.2796460

>>2796373
You do realize that your example makes a huge assumption that both outcomes would result in the same ending dollar value, right? That doesn't necessarily have to be the case.

In your first example of selling an buying back, you're limited to an absolute amount of $5. Whereas, in your second example of shorting, you've made the assumption that position would be closed out at just the right time to give you same exact amount of ending cash as if you had just sold and bought back later.

>> No.2796486

>>2796460
Ignore what I just said. Both options would be carried out at the same time, resulting in the same ending cash.

>>2796440
This is what would make this worthwhile

>> No.2796507

>>2796460
the examples are the same insofar as you forget that in one case the "original" share was bought and in the second borrowed

>> No.2796514

If you short with a separate fund, you'll be making money on the short, with the long position loses. Then once the price rises, you close the short, and realize the gains. Then, your loss on the long hold reduces gradually as price increases. Overall, your account will end up with a better balance than if you hadn't shorted (with a separate fund) when prices were dropping.

>> No.2796678

>>2796418
>>2796440
>that's assuming the price goes down lol

Wrong

Scenario A: Sell and buy back
>Start with 1 share, and zero cash
>sell, now you have 0 shares, and $10
>price goes up to to $13.50
>buy back the share
>you have to borrow $3.50 to be able to afford the share
>now you have 1 share and negative $3.50

Scenario B: HODL and short
>Start with 1 share, and zero cash
>short 1 share @$10
>cover position at $13.50
>now you have 1 share and negative $3.50

Q.E.D.

Borrowing a coin to sell and buy back later is the same thing as using your own coins to sell and buy back, literally the same thing, it doesn't matter if they're in different "funds".

>> No.2796682

>>2795715
HAHA Share if you agree ! XD XD XD

>> No.2796724

>>2796678
you're not bound to buy the share back in Scenario A, that's the difference.

you have the freedom to possibly wait or make a better choice because you were using your own money/shares and not trading on credit

>> No.2796760

>>2796678
You are absolutely correct that selling and buying back later for cheaper is technically shorting.

But it's also important to consider the emotional impact of a loss you could be holding already.

Let's say I bought at $3000, I'm now at an unrealized loss of ~$1k.

I'm not comfortable with realizing a loss like that. So what are my other options? Well, I could borrow bitcoin to short, using a separate fund. At least that way, I can still make gains, on a short position, without first having to immediately realize such a massive loss. Personally, I think it's worth it.

>> No.2796834

>>2796724
No, your options are the exact same, you don't have any money tied up at all.

(I'm ignoring interest because I already mentioned it in my first post)

In the first scenario you sell your share for $10.
>0 shares, $10 cash
Even if you were "bounded" to buy that share back at $13.50, you can then just immediately sell the share for $13.50 with no change to your wealth.

If you have shorted a share, you can still wait it out, you can close your position at any time without affecting your wealth or exposure at all. Let's say you
>have 1 share, you're short 1 share and have $0
>you cover your short @$13.50
And here's what you do:
>also immediately sell your share for $13.50
>this covers the exact cost of buying to cover your short
>end up with 0 shares, $0 which is what you started with