Leverage – the more leverage you take, the greater is the risk. Since the market is susceptible to public sentiment and reactions, it is prone to a sudden trend reversal. By limiting the leverage size, we are helping our users to control the risks.
Shorting (Selling) implies a greater risk for both customers and the market in general. One of the reasons for the so-called “bubble bursts” is the massive selling. That’s why, shorting is usually allowed only in the mature markets, where their sizes make it too difficult and too expensive to manipulate and where participants are better protected. As a rule, short-selling is appropriate in markets with the highest liquidity, price stability, turnovers, time-tested reliability of an instrument, etc. For example, at the stock market, you can sell Apple stocks, but you can’t sell the stocks of an unknown company that entered the market like a month ago.
Oftentimes, exchanges also implement the listing levels or criteria which denote certain actions and instruments as allowed or prohibited. For example, the Tier-1 instrument allows for short-selling, using as collateral, etc. At the same time, the Tier-3 instrument is prohibited for use as collateral, short-selling, conservative fund purchases, and more.
At CEX.IO Broker, we have some acceptance criteria for the trading rules. If certain factors like the risk of manipulation or volatility are too high, it means that such an instrument doesn’t satisfy the criteria for short-selling.
After a thorough analysis of the market, we concluded that DOGE, at the moment, carries a high risk of manipulation, which means we cannot enable short selling of DOGE with leverage at these conditions. So, if you believe the DOGE price is going down – you should not trade it on CEX.IO Broker. We continue to monitor the market’s maturity, and in the future, we might consider allowing a short if it is safe enough for the market participants.
