Gate.io is one of the world’s most famous cryptocurrency exchanges. There are so many users of Gate.io, and they trade with various strategies every day. Under such circumstances, is it possible to do both construction with Gate.io? And will it be a tactic that can win in trading?
What is both houses?
Hedging is simply a trading tactic that holds both sell and buy positions in a currency pair. If there is a big move in the buying direction, the strategy is to cut the loss on the selling side and keep the buying side forever. Of course, if this is the other way around, it means doing the opposite. In other words, the direction to cut losses will be short, and the other profitable side will be long. You can make a profit and avoid a loss no matter which direction the market moves.
Advantages and disadvantages of both
At first glance, it may seem like a tactic that makes it difficult to generate profits or losses because it has both buying and selling positions, but it is actually difficult. We will then discuss the advantages and disadvantages of both.
Payment timing is difficult
Theoretically, it is a tactic that makes it difficult to make a profit or a loss, but if you make a mistake in the settlement timing, there is a risk of a big loss. Even if you move strongly in the buying direction and cut the loss, there are many cases where the buying position is also at a loss due to a crash. If you do not do this strategy after you have some trading experience and skills, you will see a lot of pain.
Reduce profits and losses
Since both houses have both buying and selling, it is theoretically difficult to make a profit and the loss can be suppressed. Therefore, it is a tactic that is said to be often used when it is not possible to read which way to go.
Hedging is effective when you do not want to close the position you are currently holding even if the market price seems to change suddenly. Even if a loss occurs in the position you have held so far due to economic indicators or political events, you can hedge the risk by turning it into a positive position later.
Virtual currency transactions are unrealized gains unless they are settled even if they are profitable, and while they cannot be used freely, they are not taxed. If you want to avoid paying taxes by fixing profits now, but you don’t want to reduce unrealized gains, you can delay taxation by holding both.
If you do both construction, it will take a lot of spread. A spread is what you take each time you open a position. Therefore, placing two orders for buying and selling will result in a loss in fees.
Easier to lose money
Note that both buildings are prone to loss cuts. This is because if you have two positions, the required margin will increase accordingly. If you want to make the most of both buildings, it is important to prepare a large amount of margin. Or you should drop the lot.
Swap points are basically negative in both buildings. Because swap points are different for buy and sell. If you hold a hedged position for a long time, you may be eaten by swap points in addition to the spread.
Open an account for free
Gate.io allows you to open an account for free. I will introduce it in the article below, so I hope you can refer to it.