I just realized that many new traders often overlook a quite useful technique when the market is uncertain – that is hedging. Simply put, hedging is opening two opposite positions at the same time to minimize risk when you cannot accurately predict the price movement.

Its operation is quite clever. For example, you see the price has risen quite high and feel it’s about to drop, want to short but are not completely sure. Instead of going all-in short, you can open a large short position, then open a smaller long position as a cushion. If the price continues to rise, the long will offset the loss from the short; if the price reverses and drops as expected, you close both positions at the same time, and the profit from the short will offset the loss from the long – resulting in a profit, albeit not a large one.

The beauty of hedging is that it also works in reverse. When you are bullish but not confident, you can go long with your main position + a small short. Interestingly, you can still perform normal DCA on one of the two positions, creating a compounding opportunity if both positions are profitable – though rare, it does happen.

Technically, the setup is very straightforward. You just need to close all current positions, go into settings, and enable the hedge mode to start hedging. I think this is a risk management tool worth learning, especially when the market is highly volatile like now.