I know a lot of people want to know if you can short bitcoin in the UK. Until now I have shied away from short selling bitcoin until I started hearing about leading bitcoin traders maximising their earnings by trading both the bearish increases in price, and the bullish price drops that we have seen more of recently.
It makes sense to short sell bitcoin when prices are clearing falling if you understand the risks of this type of trading. The process involves borrowing contracts that track the bitcoin price, and then selling them, only to buy them back again when the price drops.
If the price doesn’t go the way you expect it will you risk losing money, but if you can get your timing just right you can sell when the price is high, then use some of that money to buy back when the price is low, the difference in price being your profits.
RSI Based Bitcoin Short Selling Strategy
Above is my BTC/USD Tradingview Chart with moving averages added which you can see in the coloured red, orange, green, and blue lines, and at the bottom is the Relative Strength Index oscillator, and the Stochastic RSI indicator. Normally the standard RSI is a good guide to finding the top and bottom of the market, in tandem with the moving averages.
So when the RSI gets to very high levels (above 70), and that is confirmed by the price being above the 100 day moving average (the green line on my chart) that indicates that the price has neared its peak on the daily timeframe. When that is confirmed by the price starting to move downwards you can short bitcoin.
You will know it is time to close your short position when the price goes below the 20 day moving average (the red line on my chart) and the RSI goes below 30. At that time you can then buy bitcoin, and ride the next wave until the price tops out again.
This strategy can maximise your profits during a downward price correction like we have been seeing so far in 2018. If the price trend reverses and we start to see a bull trend again I may have to revise the strategy. As there is no consensus at the moment regarding the coming breakout – whether it is going to be a bearish or bullish scenario for bitcoin at the end of 2018, I wanted to share this information so that you may benefit from a potential bear movement.
The platform that I recommend to long or short bitcoin is Plus500 in the UK. This regulated platform trades CFDs (contract for differences) enabling you to get exposure to the bitcoin price action whether you think it will go up, or go down.
Things to be aware of:
- CFDs are leveraged products and can result in the loss of your capital.
- 80.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
- Plus500UK Ltd authorised & regulated by the FCA (#509909).
So first of all sign up for a Plus 500 account, and then this is the process of shorting the bitcoin price on their platform.
1. On the top left of the screen use the search box to find “Bitcoin” in the list:
2. On the right click on Sell.
3. Use the plus and minus buttons to select the amount of bitcoin contacts you want to trade, I recommend using only a small fraction of your account balance.
4. Once you are happy with the contract amount click on Sell to place your order.
Bitcoin price movements can be slow at times and it can take several days to complete the movement, so don’t think you need to watch the screen continuously. You can use the close at profit and close at loss options to protect yourself from a possible price reversal.
Let me know if you have any questions in the comments below and I will be happy to help.
Best of luck with your trading!
Disclaimer: This blog post is not trading advice and I am not a financial advisor, it is purely my personal opinion based on five years of trading bitcoin. I do not accept any responsibility for losses incurred if you decide to trade bitcoin yourself. Only invest money that you can afford to lose.