Profits from the hedging strategy are not as direct as regular trading, but come from reducing losses and protecting profits, which ultimately leads to an increase in net profit over the long term. Here’s how you practically benefit from it:-
✅ 1. Lock in profits
If you are profitable in a cryptocurrency trade, you can use hedging to protect that profit in case the trend reverses.
📌 Example:
You made a profit from BTC after it rose from 50,000 to 70,000, and you expect a temporary drop.
➡️ Open a short position on futures.
If the price drops to 65,000, you lost in the spot market, but gained in the hedging trade — thus: your profit is secured.
✅ 2. Reduce losses when the market declines
If you hold long-term cryptocurrencies, you can hedge with short-term positions to offset declines.
📌 Example:
You own ETH and fear a drop due to negative news.
➡️ Open a short position on ETH/USDT on the futures platform.
If the price drops, you lose in the portfolio, but offset it with profits from hedging.
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✅ 3. Profit from market volatility without direction
When the market moves up and down repeatedly, you can open two opposing positions and close one at a profit, then wait for the final direction.
📌 Example:
Open a buy and sell position on BTC at the same time (Hedge), and wait for the movement.
➡️ If it rises, close the buy for a profit and keep the sell, or vice versa.
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🔁 Result:
Achieve stable profits with lower risk.
Protects your capital from sudden crashes.
Reduce volatility in your portfolio and increase the consistency of profits.
