Bitcoin / US Dollar Perpetual Inverse Swap ContractBitMEX
Description
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I don't know when my baby might ask this question to me - this day will come - but since I'm sure you probably heard that expression already, I'll try to explain to you guys what it means with the next trade I'm going to take
Hedge a position consists in taking an offsetting position to reduce your risk exposure. For instance you are short and you decide to open a long to hedge your short position or vice versa. That's exactly what I'm willing to do and I'll explain why :
We recently broke - down - significant levels on high time frames and I am led to believe we are going lower than 6300, that's why I'm currently flat (no position) and still waiting before opening a long position. You can see my last Youtube Livestream if you wish to understand the reasons.
But you can expect at least a retest of previous support in order to convert it into resistance. That is why I feel pretty confident if wehad a bounce from 6300 that we would hit resistance around 6500. We have a bearish OB around 6450 and a breaker around 6530. So this is the zone where I feel comfortable opening a short. Will set my stop loss around 6675 because I wanna protect my trade in case price get a little bit ahead of itself or FOMO kicks in. This will force me to reduce my position size to respect my risk management but I don't mind. I would hate myself to set a stop loss too tight and see price go down after hitting my stop.
I'm thinking to take partial profit around 6100 since it's - almost - the last line of defense for bulls. But I'm not willing to take full profit and thus closing my positio. I'll explain why later :)
*On the other side, I still believe we'll see more upside for Bitcoin 1.13% (see my last Youtube Livestream) so I'm willing to enter a long position.
6100 seems a very good support for bulls since there is quite good confluence down there : - Daily level (being also the shoulder of a potential inverse Head & Shoulder pattern) - Breaker - Optimal Trade Entry (0.705 Fib retracement) - VPVR High Volume Node ( HVN 4.48% )
I'm also looking to switch back my portfolio mainly to BTC 1.13% in that zone.
I will be targeting previous tops at 6800 even though I will be really expecting a break of these highs if we see a good bounce with volume from 6100. Will take partial profits (20% at most) around these highs.
*If we actually manage to hit 6500 and 6100 I will have 2 - opposite - positions opened. This is what is called a hedged position.
If price dumps below previous swing low at 5743, we will hit my stop on my long but i will have my short running and will profit from that dump. If price pumps above 6700, we will my stop loss on my short position, but I will have my long running and will profit from that pump.
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Trade active
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Bids got filled beautifully. Have a tight stop loss now since I expect market makers to defend their long positions if price eventually dumps. I will re-assess my hedge since we first hit my bids before my asks. I might only take partial profit.
Great post, miss these kind from you, where we see your trade plan ahead of time.
Ronnie_Dong
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davidvillarreal.sa
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That was spot on man, you good! Thanks for sharing the knowledge
relxmark
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How and where/which exchange could you open both long and short at the same time? Does the exchange allow? I thought it is not possible.
CryptoTrendy
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@relxmark, Well you can open a long with futures contracts and short the perp swap on Bitmex but I'd rather open 2 accounts and have one used for my longs and the other one for my shorts
Stunner309
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This may be a dumb question but how or where are you going short? Which exchange allows shorting?
Trader_Aditya
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@Stunner309, Bitmex allows shorting and even Bitfinex. DM me if you have more questions, I would be happy to help out.
ycnexu
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So, you hedge short at 6470 didn't get a chance to fill, I gather?
Jonty1985
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Hedges still don't make sense to me.
Why not just more actively manage your positions, just going flat at times instead of hedging ?