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  3. TRADING STRATEGY: HEDGING

TRADING STRATEGY: HEDGING

  1. WHAT IS HEDGE?
  2. OTHER POPULAR STRATEGIES FOR CRYPTO TRADING

WHAT IS HEDGE?

  • Hedging is a strategy that aims to partially derisk when trading a volatile asset (such as cryptocurrencies). This technique is commonly used by investors/traders when participating in Spot or Margin/Future trading.
  • Hedging is considered a relatively useful technique to use in a fluctuating market, where the price fluctuates uncontrollably, rising or falling abruptly, resulting in potential capital losses. If used correctly, it can be used for capital preservation and minimizing investment losses.

OTHER POPULAR STRATEGIES FOR CRYPTO TRADING

  • DIVERSIFY YOUR PORTFOLIO

Portfolio diversification is the allocation of your capital across more than 01 coin/token (i.e NOT going all in).

  • SHORT SELLING

The transaction of selling a specific token knowing that the asset's price will soon decrease and buying it back at a lower price. As a result, investors will benefit from the price difference.

  • LEVERAGE (Use with caution⚠️)

Margin or Futures (perpetual contracts) is using leverage to make a profit from the original asset. If the asset's trend is identified, it will help traders earn a higher return than Spot Trade.

To implement the above strategies effectively, users need to research carefully before applying. It is also recommended that you learn and practice thoroughly this strategy with a smaller amount of capital.

Published on January 19, 2022

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