🛡️📉 Alright legends, protecting capital is key after my $600 futures blow-up. Let's talk hedging your spot bag. If you hold 1 BTC spot (say, $60,000) and expect a short-term dip, you can open a short futures position. To hedge 20%, open a $12,000 BTCUSDT perpetual short. This limits downside on that portion without selling your spot.
The cost is funding. If positive (common), your short pays longs. A $12,000 short at 0.01% every 8 hours costs around $1.20 per 8-hour period, or $3.60 daily. Minimal for significant protection.
Hedging makes sense for decent spot positions when you anticipate temporary downside but want to retain your spot asset. It’s a safety net against short-term volatility.
When NOT to hedge? If your spot bag is small (e.g., under $1,000), funding and trading fees...
The cost is funding. If positive (common), your short pays longs. A $12,000 short at 0.01% every 8 hours costs around $1.20 per 8-hour period, or $3.60 daily. Minimal for significant protection.
Hedging makes sense for decent spot positions when you anticipate temporary downside but want to retain your spot asset. It’s a safety net against short-term volatility.
When NOT to hedge? If your spot bag is small (e.g., under $1,000), funding and trading fees...