After trading BTC/USD and ETH/USD separately in opposite directions for a while, I noticed something interesting: when the market is trending or even goes sideways, the BTC/ETH ratio can move quite strongly in one direction.
Sometimes BTC keeps outperforming ETH for a while, and sometimes it's the other way around.
So my hedge is built around two possible setups:
→ Long BTC / Short ETH
→ Short BTC / Long ETH
The part is how I manage both losses and profits.
When I lose:
If the combined PnL of both positions reaches around -0.035% (N1's standard market fee on N1), I close both trades and reverse the direction, starting again with the initial position size.
When I win:
If the combined PnL reaches +0.035%, I double the position size.
If I reach another +0.035%, I double it again.
If I get a third consecutive winning move, I close both positions and restart from the initial size.
But if I take a loss at any stage, I close everything, reverse the direction and start again from the initial size.
The idea is simple: cut losing cycles quickly, increase exposure when the relative move goes in my favour, and reset after three consecutive wins.
Since I'm farming volume rather than making directional bets, I'm not trying to predict where BTC or ETH will go. I'm trying to manage probabilities, keep losses under control and make the most of favourable moves.
N1's standard market fee is around 0.035%, so controlling trading costs is a key part of the farming equation.
Compared with my previous strategy based on Heikin Ashi candles, PnL approach has been delivering much better results so far.
The biggest difference is that I no longer need to watch candle patterns or constantly analyze market direction. I just monitor the combined PnL of both positions. Simple and much easier to manage.
Still testing this approach with PnL, but it's an interesting evolution of my BTC/ETH hedge.
https://x.com/Adaminssane/status/2118091964226969714
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