At the request of AlexStp
If you have BTC on the spot, and you want to protect yourself from its decline, opening a short (short position) is an excellent tool. A short allows you to lock in the current value of the asset in case of a price drop.
Example: You have 1 BTC in your spot account, purchased at a price of 94,428 USDT (price is current at the time of writing). To protect against a price drop:
Prepare:
You need to transfer USDT to the futures account, which will be needed for margin.
Calculate the short volume:
Example:
You want to insure 1 BTC. This means you need to open a short on 1 BTC.
Opening a short:
Go to the 'Futures' section
Select the BTCUSDT Perpetual pair (perpetual futures).
Set Cross Margin or Isolated Margin — at your discretion. Isolated is often chosen for hedging.
Choose the leverage size (e.g., x2 or x5). The higher the leverage, the less margin is needed, but the risk of liquidation increases. For hedging, it's better to have minimal leverage.
Open a short position:
Set a market order (Market) to enter at the current price immediately.
Enter the position size: 1 BTC.
Confirm the trade.
If the price of Bitcoin starts to fall:
Your spot BTC will lose value. But the profit from the short will offset this decline.
If the price rises:
You will make a profit on the spot. But your short will incur a loss, offsetting this increase.
Example calculation:
1 BTC on spot = 94,428 USDT.
The price dropped to 90,000 USDT:
Loss on spot = -4,428 USDT.
Profit on the short ≈ +4,428 USDT (minus commission).
As a result, your capital remained virtually unchanged.
It is important to remember that futures require margin control. If the price rises significantly, additional margin may be required. Consider the fees for opening/closing a position and for funding (funding rate).
Hedging is capital protection, not a tool for earning. Use it consciously!
#BTC☀ #BinanceSquareTalks #Binance
