A winning short doesn't shrink in a bear market, it grows. If the trend is down then shorts will do better over time.
My point was that a bear can be quite reckless if he believes the market is headed down.
The fact that a market can only down by 100%, but can go up by more is not really relevant to day traders imo. It is very rare to get swings either way of really decent %s and over the time frame that margin traders usually trade I don't think that's relevant. In the short term traders are looking at something going up or down by a range of % over a given time period - minutes for scalpers, under 24 hours for day-traders (hence the name), and longer for other investment or trading positions. The fact that it could go up 300% but only down 100% isn't really relevant to me if I'm scalping or day trading to try to catch 5% either way. It's these guys who use margins more than investors - and they use leverage because they are usually shooting at smaller %s.
I don't see how this can be true. When people started shorting Eth down from 0.03 they went hell for leather. I saw shorts of hundreds of BTC borrowed in chunks, day after day for weeks. As long as a market is big enough and you believe the trend is going down you can short the hell out of it. The only limit relates to liquidity i.e. if it is very low volume your shorts might move the price on your own and limit how much you can short it.
It sounds to me like you are looking more at the macro picture as an investor by talking about limited potential for short compared to long, which is not what I would expect from you. For an investor rather than a trader I'd agree that shorting is less interesting and has less potential for his aim of making money passively.
I disagree. In fact, I see shorts move markets every day, so I kinda know I'm right here. You can just watch the loan book in polo for a few days if you doubt it. You will see markets getting shot to pieces with borrowed money on a regular basis. When BTC booms most of the Alts selling is not from holders, it comes from shorters who think the price should now be lower to arb its fiat value. They take it down and trading continues as normal with the short able to take profit from the trading going on at the new lows.
I can't make peace with this either I'm afraid. You are talking about these trades as if they have the capacity to get any amount of profit and loss and that just isn;t the case. People have targets they will take profits at in trading, so the upside is limited, so too do they have stop losses, and liquidation limits when they short. The upside and downside is limited by the target, not the range of possibility (that is certainly investor territory, not trading) and on any given day that can be a higher % down than up if the situation is correct.
I have been squeezed out of a few margin long positions. When BTC is booming you see how many people get squeezed out of their long positions in Alts, for fear of liquidation if BTC just keeps on going, even if you're still bullish on the asset you hold.
Now you're really confusing me lol. I thought I was the one saying shorters aren't the enemy. They help the market find its price. They are not scheming against anyone, they are quite rightly taking action to take profit where they think the market is making a mistake. They can't do that if there's no margin trading though because they can only go long. The bad guys are futures and derivatives and HFT traders, not margins shorting with the real asset (rather than paper manipulation).
Well, there are two conversations here, margins and leverage. I think its mad to argue that margin trading doesn't improve the market. I can't see any rational argument to reject that idea. I think leverage makes a lot of sense, up to a point. Obviously it can also be used to manipulate a market, but generally speaking I don't think that's what happens. Nor do I think it causes more volatility. A long can leverage as much as any short depending on what they think will happe. The more money and the more players involved the better, smoother and more quickly the prices will resolve themselves
Perhaps in the very early days. I don't think is at all true now for bitcoin or for any market that has reasonable volume relative to the kind of leverage traders can use... It's not leverage causing volatility, it's just a thin and therefore elastic market.
Anyway, I'm no expert. That's my 2 cents. I've derailed enough away from talking about MAID. It would be easy enough to have this conversation over a pint, but it's a bit exhausting typing it