I've switched my spot hedge strategy to shorts-only, here is why

General
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After nearly two years running a hedge strategy, I’ve decided to go shorts-only. There’s been a lot of debate around shorts, so I want to share why I made the switch—and how I see it after being on both sides. Please note that the following concerns shorting in spot, futures shorting is a completely different game and don’t follow the same principles I am about to share.

The Debate: Portfolio Value vs. Passive Income

There are two camps when it comes to shorting:

  1. “Short profits aren’t real profits” — When a short closes in profit, it’s because the token went down, so your portfolio value is down.
  2. “Portfolio value is irrelevant” — What matters is generating income over time. The value of the portfolio will fluctuate, but long-term compounding wins.

Which side you’re on depends on your goals. If you track success by portfolio value, shorts might seem counterproductive. If you’re after income generation, shorting can be a valid strategy. However, it’s important to notice that both views are valid, so much of the discussion we had over the months is because one side failed to appreciate the other.

I’ve flipped between both sides over the years—even before starting Gainium. I get the logic behind #2. It reminds me of running a business: you invest up front, and eventually the income stream builds wealth. Yes, your business itself might gain value (and you can sell it as such), but what really matters is the cash it produces.

That’s how I now approach shorts. It’s not about chasing upswings. It’s about building steady income with a long-term mindset. It’s less about trading. It’s more like operating a cashflow machine.

Misconceptions About Shorts

Let’s clear one thing up: you’re not making money when the short closes. You already made it when the short was opened.

Here’s what I mean:

  • Say you hold 1 token worth $100.
  • You short it with a 10% take-profit (TP).
  • That means you sell the token for $100 and place a buy order at $90.
  • Your account now holds $100 and a pending buy at $90. The $10 difference is “locked” profit—if the market fills the buy order, you end up with your original token plus $10.

Now, if you manually close the short early at 5% profit (buying at $95), you’ve effectively given back $5 of that $10 expected gain. So your available USD is real only if you stick to your plan and let the short finish. Otherwise, it’s partial.

Why I Prefer Shorts Now

The main reason I switched: peace of mind.

When prices drop, shorts bring calm. Longs don’t. On spot, both longs and shorts only grow your portfolio when prices go up. But the way they handle price drops is different:

  • Longs close in profit, then keep buying higher—fine during a rally, but terrible in a downtrend.
  • Shorts show an unrealized loss on the way up, but this loss is just the cost of not having sold higher. It’s not real unless you close the position under the average acquisition price.

When shorts close, you get back your token plus a bit of USD. That feels better to me. If the price drops, I’m not holding a bag—I’m re-acquiring my asset, with extra cash. If it rises, I see unrealized losses, but that’s just numbers unless I act on them.

A Few Caveats

Shorts aren’t magic.

  • They still need the price to go down to function. If it only goes up, your bot may stall (though, depending on your average price, perhaps you are in profit already).
  • If you sell under average price, your math gets messy. You’re likely locking in losses, and lower prices reduce the token’s ability to generate future profits.
  • I personally don’t touch profits from shorts until there’s a deep price drop. Then I use those profits to refill the base.

Also: stick with liquid, higher-cap tokens. If one low-cap coin crashes hard, it can wipe out months of careful profits.

Final Thoughts

This approach won’t be for everyone. It’s for traders focused on long-term income who understand the mechanics of shorting deeply. If you’re more concerned with portfolio value in the short term, you might find it uncomfortable.

But if you’re like me, and think of your strategy like a business—not a bet—shorts might just give you the control you’re looking for.

4 Likes
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it will much comment in this page hahaha

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profiting in USDT or profiting in BTC? … or is it like a rule for example if the BTCUSDT weekly RSI is oversold you activate with profiting in BTC

… if the BTCUSDT Weekly RSI is overbought you switch to profiting in USDT …,

my approach is by thinking that in the first case by profiting in BTCs in an expected uptrend you increase your portfolio value also by the BTC growth , and then if a downtrend is expected in the second case by switching your profit to USDT you improve your “entry value” … for prepare to the next uptrend.

what do you think @aressanch and @everybody? :slight_smile:

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That’s a valid strategy, but I keep things more simple. Btc is my biggest position and the only bot that profits in base. The other tokens profit in usdt. Every now and then when there are major drops I go shopping, mostly btc but if I’m low in another token I will buy it too.

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(post deleted by author)

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Happy to see other people believing in unicorns and printing money machines.

Short and long are best friends and they love working together - why? because they create a collective trap around the price AKA long and short are the same.

If I can push you a step further emotions have nothing to do with the bot direction, the market, the price or the profit - emotions come from inside not from things or events. The moment you are not bothered about the market and what your bots do then you start making actual profit and stop wasting your time.

See you at the petrol station :fuelpump:

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Could you recommend any indicators suitable for shorts? I’ve tried inverting my Long indicators but most of them turned out badly. :frowning:

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I ran through a mental test for SOL as it is a top coin and has gone through extreme price action over past couple of years

Lets Take SOL from your example

SOL fell from 260$ to 10$ from 2021 ATH to Ftx crash.

Say you bought 1 SOL at 200$ price worth 200$ for the short bot which is what the settings say for shorts

By the time it came to 10$ it lost 95% value
Maybe the short bot made 50$ profit which is being generous imo but more on this at the end

Now when the latest short bot starts at 10$.
In just Base order and SO1 worth 5$ you sell away all your SOL

At which point you have in total 60$ USDT and no SOL.
SOL now pumps hard and the short deal never TPs.
At this point reaching ATH again is useless as we did in 2025.

Loss being -150$

Now the counter argument is during SOL price action from 200 to 10$ and 10$ to 200$ the volatility will earn you 200$ easily recovering your original investment.

Now this I find insane that a bag worth 200$ probably closing most of its deals at base order makes 200$ in profit.
Mathematically there are just finite number of deals that can close on short before 10$ is reached.

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Screenshot 2025-04-23 at 20-42-11 Profit Target Strategy
Screenshot 2025-04-23 at 20-42-11 Profit Target Strategy920×778 33.9 KB

:face_with_monocle:

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That’s just one particular time period, most tokens lost 80-95%. I think the chance of Sol going to $10 is much smaller nowadays. You also didn’t take into consideration reinvesting the profits. You would have bought more coins on the way down, sol or others, with the usdt produced. And related to that, you would enter coins at different times. So your chance of making one bad investment that would jeopardize your portfolio is smaller.

In other words, you are just looking at what if I bought sol at a bad time and did nothing else. Like I said I treat this strategy like a business, there are ways to optimize it, and knowing when to buy and when to reinvest profits it’s an important part.

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Deleting my first reply from your topic isn’t okay. Please, restore it and reply to it. Feel free to prove me wrong if you can. Else it’s purely censorship.

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Honestly I’m just tired of your comments and didn’t feel like replying. And no it’s not coming back. What is not OK is to argue for the sake of arguing. You did nothing but introduce confusion and dubious math, all to prove a point that didn’t need to be proven because I already addressed on the original post. So do me a favor and stay away from this conversation.

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I am sorry for unintentionally modifying your example. You are right that I made a mistake in transferring the amounts from your example. Instead of buying 1 token and selling 1 token at the start, my example used only 0.1 tokens for the “short” spot deal.

That is, with the all-in/all-out approach you described, you can buy back 1 token at a price of $90 and have “saved” $10 and your portfolio is still worth $100.

And of course you can even go down to a price of $10 with 1 token worth $10 and $90 in your wallet minus fees.

But would you really use the all-in/all-out approach to start your deal? Would you run your deals without DCA orders?

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That’s just an example of shorts work not an example of a strategy. The point that the portfolio value declines when the price goes down I’ve already said in the first post. What is your point?