A short position (or simply ‘short’) is the act of selling an asset with the intention of purchasing it back at a lower price in the future. An investor shorts when they have the expectation that the value of a given asset will drop. The most typical variation of this practice is known as a Covered Short. This is when an investor does not own but instead borrows the target asset for a fee. They then sell the asset, wait for the price to drop, and re-purchase it again to return it to the original owner after having made a profit.
How does this apply to Phemex?
On Phemex.com, to Sell or Short means to place a sell order for a predefined number of Perpetual Contracts at a specified price. If the price of your underlying asset decreases, you then have the option of selling these contracts at your original Entry Price. The difference between your Entry Price and the Final Price at the moment you execute your position is equivalent to your profits minus any associated fees and costs.
Of course it is possible that the price of your underlying asset may increase and yield a loss. Because Phemex deals with Perpetual Contracts, you are allowed to hold your position for as long as you want or as long as your funds will allow.
