What Is Hedging in Crypto Futures Trading on Pluang?

Hedging in Crypto Futures trading on Pluang is a risk management strategy where you open a position that moves opposite to an exposure you already hold, so a loss on one side is offset by a gain on the other. This most often means opening a short Crypto Futures position on an asset you already hold in your spot wallet. Hedging does not create new profit — its purpose is purely defensive, and it reduces risk rather than eliminating it entirely.

• The goal isn't to generate extra profit — it's to reduce the impact of adverse price movements on a position you already have, so you can stay invested through expected volatility instead of selling and re-buying later.
• Example: holding a crypto asset in your spot portfolio and opening a short Crypto Futures position on the same asset to offset expected short-term weakness, without selling your spot holdings and potentially missing a rebound.
• A hedge doesn't need to be all-or-nothing — you can hedge only part of your exposure, for example 25% or 50% of your spot holdings' value, keeping some upside participation.
• Hedging has costs too: margin is required, and funding rate payments can add to or reduce the cost of keeping the hedge open over time.
• Sizing and timing matter: a hedge that's too small won't meaningfully offset losses, while one that's too large can flip into a net short position if the price recovers unexpectedly.

Related questions:

Q: Does hedging guarantee I won't lose money?
No. Hedging reduces the impact of adverse price moves, but it does not eliminate risk entirely — funding costs, hedge sizing, and basis risk between futures and spot price can still affect the outcome.

Q: Do I have to hedge 100% of my position?
No. You can hedge only part of your exposure, which still gives you some participation in favourable price moves. Many traders choose a partial hedge ratio, such as 30% or 50% of their spot holdings' value.

Q: What position do I open to hedge against a price drop?
A short Crypto Futures position on the same asset you already hold in spot, so a drop in price is offset by a gain on the short side. Isolated margin keeps the maximum loss limited to the allocated margin.

Q: Does holding a hedge cost anything?
Yes. You need margin to open the futures position, and ongoing funding rate payments can add to or offset the cost of keeping the hedge in place, depending on whether funding is positive or negative.