How to Make Money with Margin Trading | Complete Guide to Long vs. Short

Have you ever heard stories in the world of crypto asset trading about “making big profits with leverage”? The secret behind this is margin trading. But if you do it wrong, you could lose your funds in an instant… Today, I’ll explain how long and short positions work in a way that even beginners can understand.

Long vs. Short: What’s the Difference?

Long (Buy)

• Expecting the price to rise → Buy low, sell high
• Example: Buy 1 BTC at 50,000 USDT → Sell at 52,000 USDT = Profit
• With margin trading, you can place large orders by “borrowing USDT” even with a small amount of your own capital

Short (Sell)

• Expecting the price to fall → Sell high, buy back lower
• Example: Sell BTC at 50,000 USDT → Buy back at 48,000 USDT = Profit
• This means there’s a chance to make money even in a market crash

Real Example: The Power of 5x Leverage

Case 1: Long (Successful Example)

Scenario

• Your funds: 10,000 USDT
• Current BTC price: 50,000 USDT
• Trying with 5x leverage

The exchange automatically lends you 40,000 USDT, and you buy 1 BTC. Two days later, BTC rises to 52,000 USDT, so you quickly sell.

Profit = (52,000 - 50,000) × 1 = 2,000 USDT

In a normal spot trade, that’s a 20% profit, but with leverage, the effect is 20x (excluding fees and interest).

Case 2: Short (Successful Example)

Scenario

• Your funds: 10,000 USDT
• Current BTC price: 50,000 USDT
• Trying with 5x leverage

You “borrow” 0.8 BTC and sell it at 50,000 USDT. Two days later, the price drops to 48,000 USDT, so you buy back 0.8 BTC for 38,400 USDT and repay.

Profit = 50,000 - 38,400 - 10,000 (initial funds) = 1,600 USDT

This creates a chance to take large positions even in a falling market.

Caution: The Double-Edged Sword of Leverage

These examples show profits, but if the price moves against you, losses are magnified. You could lose your entire capital or even go into debt. Always set stop-losses and manage your funds carefully.

Fees and interest are not included in the above examples. Be sure to check your platform’s fee schedule for actual trading.