🟥 When is hedging dangerous?

If you are close to liquidation, hedging will not save you.

Example:

  • Long at 0.0249

  • Liquidation 0.01570

  • Current price 0.0193

If you opened Short now:

  • The Long is still possible to be liquidated

  • And the Short will not prevent liquidation

  • But it may increase the pressure on you if the price suddenly rises

🟢 When is hedging useful?

If you are:

  • Far from liquidation

  • And you want to temporarily lock in the loss

  • Or are you waiting for a better exit opportunity

  • Or do you expect strong fluctuations and want to protect your capital