TradingIntermediate#Risk Management#Strategy
Hedge (Cobertura)
H
Definition
A position taken to offset potential losses in another investment, essentially acting as an insurance policy.
Verified by CryptoLV Alpha
Concept Diagram
Key Takeaways
1
Hedging opens an opposing position to offset potential losses in your primary portfolio.
2
Common crypto hedges include short positions, put options, and stablecoin allocation shifts.
3
A perfect hedge eliminates risk but also eliminates upside — most traders use partial hedges.
4
AI agents can dynamically adjust hedge ratios based on volatility, correlation, and market regime.
Practical Example
You hold 10 ETH ($30,000). You're worried about a short-term dip, so you short 3 ETH on Binance futures. If ETH drops 10%, your spot loses $3,000 but your short gains $900 — reducing your total loss to $2,100.
Finished learning?
Related Terms
Trading
Stop LossAn advance order to sell an asset when it reaches a specific price point, used to limit loss on a position.
Strategy
Zebra StrategyA defensive, algorithmic position management style that alternates quickly between stablecoins and risk as volatility spikes.
Macro
Black Swan EventAn unpredictable, rare event that has a massive impact on market prices, such as a major exchange collapse or geopolitical crisis.
Trading
DerivativesFinancial contracts set between two or more parties that derive their value from an underlying asset, group of assets, or benchmark.
Related Deep Dives
Master the hub of Trading
Explore all our strategic guides about Trading to take your operations to the next level.
View all articles