I Borrowed and Shorted Hero and Lived to Tell the Tale

I borrowed and shorted Hero and lived to tell the tale

I’ve been intrigued with the concept of Hero from the very beginning. I’ve followed @stan posts which explain the concept of the coin. I was all the more interested when I discovered Hero would be backed by bitshares which I had purchased a few weeks before.

I was fascinated with the post by @billbutler which explained how he borrowed and shorted Hero and made a profit. You can see that post here.

https://steemit.com/bitshares/@billbutler/borrow-hero-and-short-it

I was determined to understand this, but I had never done anything like this before. In my mind shorting a stock or in this case a coin brought forth visions of the margin call in the old movie “Trading Places”. In this case, they lost everything.

I read posts by @stan about Hero and how your risks would be limited because Hero is backed by bitshares. I asked many questions and they were great about answering. I felt a little like Eddie Murphy learning this.

After more questions I had this exchange with @billbutler

I took notes from his post. At this point I was in the “Explain it to me like a 5 year old” phase as you can see by my somewhat crude notes. I even drew this little drawing of what the trading platform looked like. (ok, I’m not an artist!)

I used these notes to walk me through the process. I started by borrowing a tiny amount of Hero using my bitshares as collateral. I was nervous, I was not ready to risk too much. I was nervous........ At first it looked like my asking price which was the market price was going to be too high, but during the middle of the night I awoke to see that someone had bought it at this price.

I immediately put in a lowball order to buy the Hero back. Once again, I was nervous that I could not buy it back at this price, but I was able to do so pretty quickly. My profit was minimal since I had started by borrowing only a fraction of the Hero, but I had made a profit in bitshares and I was thrilled.

Now that I understood the process, I borrowed a larger amount of Hero and did it again. This time the profit was worthwhile. I was thrilled!

I can only imagine what this would be like on a larger scale.

For me this small success was a huge step! I was feeling pretty good.

Perhaps the most important aspect of this experiment was that I feel like I finally grasped how Hero could really change the financial world. I was able to borrow, short, and sell a coin......then buy it back and make a profit. The key for me was that because of the way Hero is set up, I could do this with very little risk. This fact alone opens the cryptocurrency world up to an entirely new audience. Suddenly this type of investment may be appealing to people saving for retirement who tend to be more conservative. You can read more about Hero and bitshares here.

https://steemit.com/bitshares/@stan/shall-we-play-a-game

Thank you to @stan and @billbutler for explaining this to me.

As a disclaimer: this was only my experience and I am not offering financial advice

If I can take the Hero challenge, anyone can! Thanks to all who helped me understand this!