What happens when your paired trade goes completely wrong? 📉
🔹 The connection between coins can weaken or disappear, turning a pair trade into two separate, independent bets.
🔹 Both legs can go negative at once: your long coin falls while your short coin rises.
🔹 Instead of canceling each other out, your losses actually add up together.
🔹 This often happens during stressful market moments when prices become unpredictable.
For example: Coin A drops 7% and Coin B rises 5%. Long A loses 7%, short B loses 5%. Total loss: -12% before fees.
⚠️ Common mistake: Not planning for the worst-case scenario where both legs are in the red simultaneously.
How do you decide in advance that the connection between coins is no longer working?
#Futures #CryptoTrading #CryptoEducation #RiskManagement
🔹 The connection between coins can weaken or disappear, turning a pair trade into two separate, independent bets.
🔹 Both legs can go negative at once: your long coin falls while your short coin rises.
🔹 Instead of canceling each other out, your losses actually add up together.
🔹 This often happens during stressful market moments when prices become unpredictable.
For example: Coin A drops 7% and Coin B rises 5%. Long A loses 7%, short B loses 5%. Total loss: -12% before fees.
⚠️ Common mistake: Not planning for the worst-case scenario where both legs are in the red simultaneously.
How do you decide in advance that the connection between coins is no longer working?
#Futures #CryptoTrading #CryptoEducation #RiskManagement