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HEDGING RISKS

11/12/2018
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Hedging in general means any actions that are aimed at minimizing your risks.

Classical hedging is based on changes in prices for some asset and its futures price, which allows traders to compensate their losses on derivatives market with the help of the real asset. In other words, if you buy real bitcoins on exchanges, you can secure yourself from losses by shorting futures on BTC with a broker. And vice versa, if you sell real Bitcoins (for USD or USDT), you can hedge yourself with a long position on the futures market.

This strategy works only for investors with large deposits, who are ready to wait for their profits for a long time.

What about traders who only trade futures and choose short-term profits?

Hedge funds have worked out an effective technique called “130-30”. It is mainly about opening opposite positions for the same asset. For instance, if you go long for 1 BTC and expect the asset to grow in price, you can also hedge by shorting for 0,33 BTC.

How to do hedging with LH-Crypto, if you have only one contract for each asset?

Back in the old days, you had to register one more account and make the opposite positions with it; however, now LH-Crypto offers an easier, more effective option – locking.

Locking gives you an opportunity to open a new order for the same asset, without closing or breaking the previous order. At the same time, your margin goes free, since it’s equal to zero now, and you can use it for other orders.

Locking is not new, it has been used in Forex and Stocks exchanges for decades, there is a plenty of strategies based on locking, and we have to admit that most of them are rather effective. Here’s one of such strategies for Forex.

Locking has never been applied to crypto trading, so we can state that LH-Crypto is a pioneer in this field. What is locking going to be like with the high volatility of crypto assets? We have got interested in it, and we’re now making an experiment to see how it goes – we’ll take the above strategy and apply it to cryptocurrencies. Follow us to see the results!

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LH-CRYPTO is an online service for crypto-traders

LH-CRYPTO is an online service for crypto-traders. The service is available to everyone, except for the citizens of particular countries and several categories of people listed in the License Agreement. LH-CRYPTO is a free software for making conversion operations with CFDs on various financial assets nominated in cryptocurrencies.

The project does not manage funds and does not guarantee profits. The project only offers a service that allows to make conversion operations with cryptocurrencies on a specially configured software.

This website is maintained and supported by the following legal body:

LARSON AND HOLZ IT LTD

All the settlements in this project are processed solely in cryptocurrencies. Conversion operations are processed on the terms of margin trading without a direct supply of underlying assets. According to the generally accepted term, these operations are called operations with OTC (over the counter) CFDs (contracts for difference).

Trading with OTC CFDs involves considerable risks. We recommend you pay the utmost attention to both theory and practice of margin trading before making any of such operations.

The services provided by this project are not available for: residents of USA, North Korea, Sudan and Syria.