Hedging saved my ass in this fall.

I'm a crypto enthusiast, and I wish for crypto to be the future. I'm also an advocate for stopping the valuation of crypto in US Dollars.

But when I need some money, I have to withdraw some of my Bitcoin in form of US Dollars. We're not at the stage of spending our crypto side by side with our fiat just yet, and I have to live.

So I mostly trade the BTC/USDT pair on Binance although I'm against the USDT in the pair. I feel that Bitcoin should be the defacto currency of the crypto world.

Buy that's not what this post is about. I'm writing this post to discuss how hedging saved my ass, and how it can save yours too.

I have that prelim because I wanted to express my need to value Bitcoin in US Dollars, averse as I might be against it.

Whether we like to admit it or not, the stability of the Tether and DAI is a very big advantage, especially in times like this.

The volume of Dollars in the world is at least a hundred times more than that of Bitcoin, and with the amount of dollars being printed every other day, that metric won't be changing in a while.

Believe it or not, it is actually this relentless and incessant printing of unrequested money that keeps the dollar so stable. But that's a post for another day.

As most of my monthly income comes from trading Bitcoin, I need to have that stability if I'm to know where my next meal would be coming from.

That's why I practice hedging a lot.

Here's what hedging is in a nutshell.

Whenever I make a trade(I usually position trade, which is holding a position for longer than a day. It brings big returns in the order of 15-20% when you get it right), I tend to be in that trade for at least 2 days before closing my position. When I close that position(98% of the time in profit, because it's position trading and you shouldn't lose money on it)I usually get my profit in BTC.

Common sense dictates that if I just closed a position, chances are that it's closer to the top and will start to decline soon.

So I send my BTC over to my KuCoin account and buy DAI with it. This is called hedging my BTC in DAI.

What this allows me to do is to be able to buy that same amount of BTC in any market conditions.

So if I made a $1000 profit and hedge it in DAI, if the price goes down by $500 tomorrow, I can get 1500 worth of what I would normally get for 1000.

And if the price goes up, I'll still be guaranteed that I can purchase $1000 worth of Bitcoin if I feel like chasing the trend.

I actually did this before the big crash, and preserved my capital. At least most of it. I still had a position open that I forgot to close, so that one is in a deep 59% loss right now. I haven't closed it yet though.

Hedging is a very important process if you're like me and you live off your trading.

Sure, it has its downsides. Like if Bitcoin goes up in price, you only locked in your profits in something that is stable, so you don't get the extra profit if the price goes up.

That said, the level of insurance offered by hedging is very important to non hodlers and people who want to protect their profits 

Thanks for reading.