Short selling trading, in simple terms, is going against market enthusiasm and tests whether you can stay calm during the FOMO wave. Data shows that when a certain coin's social buzz surges by 300% and its price has already increased by over 30%, the success rate of contrarian operations can reach over 70%—but only if you have a complete system in place.

First, choose the right target. There are three strict rules here. Only mainstream coins ranked in the top 50 by market cap with futures trading are worth considering; altcoins have liquidity pitfalls that can easily trap you. The timing window for shorting must be strictly controlled—when the weekly RSI breaks above 80 and a bearish divergence appears on the daily chart, that’s the signal to enter; don’t be greedy with leverage—3-5x is enough. Leaving room for additional margin is a rational approach.

Multiple confirmations are needed on the signal level. Check the liquidation heatmap—if there’s a dense area of forced liquidations above, set a short order 1.5% below; on-chain monitoring of large addresses continuously transferring coins to exchanges often signals selling pressure; a sudden spike in the put/call ratio in the options market usually indicates big players are hedging—these details, connected together, can improve your win rate.

Position management is most stable with an inverted pyramid. Start with 5% of total funds; every 10% price increase adds 3% to your position, but overall not exceeding 15%; set stop-loss 3% above the previous high to prevent being smashed through by sudden violent rallies. This logic ensures limited losses in expectation and decent profits.

The final hurdle is mindset. The most tormenting part of shorting is the growing unrealized loss and the anxiety it causes. You must set a daily maximum loss limit (e.g., 2% of total funds), and stop trading immediately when reached. Bitcoin has experienced several days with over 20% extreme gains, and those moments are the true test of a short seller’s discipline. Ultimately, short selling is a game of correcting overly optimistic market sentiment. Only traders who can endure psychological pressure and stick to discipline will have a chance to survive longer.