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An indepth analysis of how to profit from Bitcoin hedging

Date:2024-04-07 18:56:40 Channel:Wallet Read:
In today's booming digital currency market, Bitcoin hedging trading has attracted much attention as an important investment strategy. With an in-depth analysis of how Bitcoin hedging can be profitable, we can lift the veil off this mysterious field and explore its mysteries and opportunities.
Bitcoin hedging trading refers to the strategy of using different markets, varieties or contracts to trade in order to avoid risks and obtain profits. In this type of trading, investors take advantage of price fluctuations to earn the difference by conducting long and short trades at the same time. There are many ways to make money from Bitcoin hedging, and below we will analyze it in depth from a few key angles.

The four most famous international exchanges:

Binance INTL
OKX INTL
Gate.io INTL
Huobi INTL
Binance International Line OKX International Line Gate.io International Line Huobi International Line
China Line APP DL China Line APP DL
China Line APP DL
China Line APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

First, an important factor in Bitcoin hedging profitability is market volatility. As Bitcoin prices fluctuate wildly, hedging traders can realize high profits in a short period of time. For example, when the price of Bitcoin suddenly rises, investors holding short positions can make profits by closing their positions through hedging transactions; conversely, investors holding long positions can also avoid risks through hedging operations. This flexible trading strategy allows hedging traders to profit from market fluctuations.
Secondly, another key factor in making Bitcoin hedging profitable is arbitrage opportunities. Due to the fragmentation and information asymmetry of the Bitcoin market, various arbitrage opportunities exist. For example, cross-platform arbitrage can obtain profits from price differences by buying and selling Bitcoin on different exchanges; futures arbitrage uses the difference between Bitcoin futures and spot market prices for trading. These arbitrage opportunities provide hedging traders with lucrative profit opportunities.
Additionally, the third element of Bitcoin hedging profitability is technical analysis. Hedging traders usually use various technical analysis tools to predict market trends and formulate trading strategies. For example, technical indicators such as moving averages and relative strength indicators can help hedging traders capture the market's buying and selling signals, thereby obtaining more profit opportunities. The use of technical analysis can improve the accuracy and profitability of hedging transactions.
Additionally, the final element of profitable Bitcoin hedging is risk management. In hedging transactions, risk management is crucial. Hedging traders need to reasonably control positions, set stop loss points, and adjust trading strategies in a timely manner to avoid market risks. Only by doing a good job in risk management can hedging traders remain invincible in the fierce market competition.

I believe that many stock investors know what hedging is, but they may feel unfamiliar with Bitcoin hedging. In fact, Bitcoin hedging is also very simple. It is to buy Bitcoin and short Bitcoin at the same time, thereby achieving mutual profit and loss. In a balanced state, if Bitcoin rises, profits will be made through Bitcoin; otherwise, profits will be made through contracts. The two sales and purchases are in opposite directions. No matter which direction the price changes, one will always make a profit and the other will lose. For most investors, what they most want to know is definitely how to make a profit by hedging one loss and one profit in Bitcoin. Below, the editor of Bitcoin Circle will give you a detailed answer.

## How can you make a profit by hedging one loss and one gain in Bitcoin hedging?

Bitcoin hedging means that investors buy and sell Bitcoin at the same time to obtain profits from the price difference. This strategy can help investors take advantage of Bitcoin price volatility to generate income without having to worry about long-term price changes.

To make a profit, you must first understand the price trend of Bitcoin so that you can make the right decisions on the timing of buying and selling. At the same time, investors also need to grasp the real-time changes in Bitcoin prices so that they can take timely measures to avoid losses. In addition, investors also need to choose an appropriate investment portfolio based on market conditions and personal risk tolerance to obtain maximum returns.

In short, Bitcoin hedging is an effective profit strategy, but it requires investors to have good market analysis and risk control capabilities in order to effectively seize opportunities and obtain higher returns.

## Bitcoin hedging arbitrage tutorial:

Let’s take long and short leverage trading as an example to introduce you to a tutorial on Bitcoin hedging and arbitrage:

1. Open the official website () and download OKX
After APP, click "Register/Login" on the homepage, click "Register Now", enter your email address, click "Register", then enter the six-digit verification code received by email, which is valid for 10 minutes.

1.1. Next, you need to verify your mobile phone number. Enter your mobile phone number, click "Verify Now", and then enter the mobile phone verification code. The verification code is valid for 10 minutes. Click "Next"

2. Personal information settings

Before buying/selling currency transactions, two personal information settings are required: KYC authentication and binding mobile phone number.

KYC verification: Click directly on [Identity Verification].

Bind mobile phone number: Click the icon in the upper left corner - [Security Settings] - [Mobile Phone Verification] and follow the prompts to complete binding the mobile phone number.

3. Add payment method

Open the Ouyi App homepage, click [C2C Buy Coins] - [More] icon in the lower right corner - [Payment Method] - [Add Collection Account], [Payment Method] select the corresponding bank card/Alipay/WeChat Pay to set up That’s it.

4. Transaction settings

1) If you want to conduct contract trading, you need to open the account mode and set it to single-currency margin mode or cross-currency margin mode.

2) You can continue to set up the contract, personalize the trading unit and order mode.

5. Perpetual contract trading

Perpetual contracts are divided into USDT margin contracts and currency-based margin contracts. Here we take the USDT margin perpetual contract as an example.

1) First transfer our digital assets from the capital account to the trading account. If it has been completed, there is no need to perform additional transfer operations.

2) On the trading page, click the drop-down button on the right side of the currency pair, enter the currency in the search box, select Perpetual in the margin trading area, and select the U-based contract corresponding to the currency. (If your current page is on the corresponding currency page, you can also directly click the button in the upper right corner to switch to the perpetual contract trading mode)

3) Set the leverage multiple, select the account mode and order type, enter the price and quantity, and click Buy to open long (bullish) or Sell to open short (short). For unfilled pending orders, you can click Cancel to cancel the order.

4) After the pending order is completed, you can view the relevant data of the order in the position interface, such as margin, income, rate of return, estimated liquidation price, etc.

5) You can set stop-profit and stop-loss on the position interface. You can also choose to close the position, enter the closing price and quantity to confirm the closing, or select the market price to complete the closing operation.

6. Delivery contract transactions

Delivery contracts are divided into USDT margin delivery contracts and currency-margined delivery contracts. Here we take the currency-margined weekly delivery contract as an example.

1) Similarly, transfer our digital assets from the capital account to the trading account. If it has been completed, no additional transfer operations are required.

2) Click the drop-down button on the right side of the currency pair on the trading page, enter the currency in the search box, select delivery in the margin trading area, and select the currency-based contract with the contract period of the current week, next week, current quarter, or sub-quarter. Here we take the current quarter contract as an example.

3) Set the leverage multiple, select the account mode and order type, enter the price and quantity, and click Buy to open long (bullish) or Sell to open short (short). For unfilled pending orders, you can click Cancel to cancel the order.

4) After the pending order is completed, you can view the relevant data of the order in the position interface, such as margin, income, rate of return, estimated liquidation price, etc.

5) You can set stop-profit and stop-loss on the position interface. You can also choose to close the position, enter the closing price and quantity to confirm the closing, or select the market price to complete the closing operation.

The above is the editor's introduction to the issue of how to make a profit by hedging one loss and one profit in Bitcoin. There are currently many Bitcoin arbitrage strategies in the market, but they remain true to the same principle. The essence of arbitrage is the price difference. Only with the price difference will there be opportunities for arbitrage. If you want to have a deep understanding of Bitcoin arbitrage, you need to improve it in practice. Don’t follow the trend and invest blindly. In the hot Bitcoin market, you may encounter arbitrage scammers with various names. Before hedging in Bitcoin, investors should study the market conditions before making a move and trade at the right time.

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