Are you doubling down on losing pair trades? 📉
🔹 Averaging down means adding to a position in the red to "improve your average price."
🔹 In pair trading, this increases your bet on a relationship that has just stopped working.
🔹 If the connection between coins breaks, you invest money into an error instead of fixing it.
🔹 As the divergence continues, your overall loss and liquidation risk grow significantly.
For example, if your pair is down 3% and you double both legs, a continued spread divergence will make your losses grow roughly twice as fast.
⚠️ Typical mistake: Adding to a pair just because "the spread is even more favorable now."
Why is averaging a pair position more dangerous than averaging a regular position?
#Futures #CryptoTrading #CryptoEducation #RiskManagement
🔹 Averaging down means adding to a position in the red to "improve your average price."
🔹 In pair trading, this increases your bet on a relationship that has just stopped working.
🔹 If the connection between coins breaks, you invest money into an error instead of fixing it.
🔹 As the divergence continues, your overall loss and liquidation risk grow significantly.
For example, if your pair is down 3% and you double both legs, a continued spread divergence will make your losses grow roughly twice as fast.
⚠️ Typical mistake: Adding to a pair just because "the spread is even more favorable now."
Why is averaging a pair position more dangerous than averaging a regular position?
#Futures #CryptoTrading #CryptoEducation #RiskManagement