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LIVEDragon Capital
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I am both an investor and a trader. My lessons come after several crypto uptrend seasons have passed.
The nature of the Binance Future feature was created to help you hedge against market risks and protect your spot wallet when the market is about to have a highly influential news flow. But what do you do if you are a complete trader on Binance Future and fall into a losing position? Will you wait for your order to hit stop loss or continue to add more margin to your order?
To get out of the situation of constantly pumping margin, you need to get out of the situation of additional losses first. Suppose you have a Long ETH order but the ETH price falls and causes you to lose 500 USDT. The next step to do is to move the position of the Long ETH order from Isolate to Cross. This helps your order continue to maintain its position. Besides, if the ETH price decrease is just an adjustment, you should keep the order. Then use a corresponding Short BTC order. Because BTC and ETH are coins with relatively similar volatility. Note that both of these orders should have the same volume - USDT, same leverage and same Cross. This is called the Hedging method. This method helps you maintain account stability when the market fluctuates strongly. From here, your account will only stop at a loss of 500 USDT.
You may wonder why I don't go with LONG and SHORT ETH. Vi Binance does not allow you to do that on the same trading pair. So we must choose a trading pair with a corresponding level of movement.
The above example I am taking is from the way I am trying to hedge my ETH order losses using the Hedging method. Hope it will help you.
The nature of the Binance Future feature was created to help you hedge against market risks and protect your spot wallet when the market is about to have a highly influential news flow. But what do you do if you are a complete trader on Binance Future and fall into a losing position? Will you wait for your order to hit stop loss or continue to add more margin to your order?
To get out of the situation of constantly pumping margin, you need to get out of the situation of additional losses first. Suppose you have a Long ETH order but the ETH price falls and causes you to lose 500 USDT. The next step to do is to move the position of the Long ETH order from Isolate to Cross. This helps your order continue to maintain its position. Besides, if the ETH price decrease is just an adjustment, you should keep the order. Then use a corresponding Short BTC order. Because BTC and ETH are coins with relatively similar volatility. Note that both of these orders should have the same volume - USDT, same leverage and same Cross. This is called the Hedging method. This method helps you maintain account stability when the market fluctuates strongly. From here, your account will only stop at a loss of 500 USDT.
You may wonder why I don't go with LONG and SHORT ETH. Vi Binance does not allow you to do that on the same trading pair. So we must choose a trading pair with a corresponding level of movement.
The above example I am taking is from the way I am trying to hedge my ETH order losses using the Hedging method. Hope it will help you.
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