How can you profit from the price difference between coins rather than from a rising market? 📈
🔹 Pair trading means simultaneously opening a long position (betting on a rise) in one coin and a short position (betting on a fall) in another coin that has historically been correlated with it.
🔹 Your profit comes not from the direction of the market’s movement, but solely from changes in the price difference between the selected coins.
🔹 This approach is called statistical arbitrage: we rely on historical data about the relationship between assets, rather than our personal opinion about their future prices.
Example: the market rises. Coin A goes up by 3%, while coin B goes up by 1%. Our long position in coin A gains 3%, while our short position in coin B loses 1%. In the end, we earn 2% of the amount invested in one leg of the trade (before fees).
⚠️ A common mistake is to treat the pair as two separate trades, when in fact the overall result is determined only by the difference between them.
Have you tried trading a pair instead of a single coin? What gave you pause?
#Futures #CryptoTrading #CryptoEducation #RiskManagement
🔹 Pair trading means simultaneously opening a long position (betting on a rise) in one coin and a short position (betting on a fall) in another coin that has historically been correlated with it.
🔹 Your profit comes not from the direction of the market’s movement, but solely from changes in the price difference between the selected coins.
🔹 This approach is called statistical arbitrage: we rely on historical data about the relationship between assets, rather than our personal opinion about their future prices.
Example: the market rises. Coin A goes up by 3%, while coin B goes up by 1%. Our long position in coin A gains 3%, while our short position in coin B loses 1%. In the end, we earn 2% of the amount invested in one leg of the trade (before fees).
⚠️ A common mistake is to treat the pair as two separate trades, when in fact the overall result is determined only by the difference between them.
Have you tried trading a pair instead of a single coin? What gave you pause?
#Futures #CryptoTrading #CryptoEducation #RiskManagement