In this example you will:
Keep your Spot coins on the exchange
Open a Short Futures SmartTrade on the same pair
Attach Stop Loss and Take Profit to the hedge
See how profit on the hedge can offset losses on the Spot position
This is called hedging: you are not trying to “double bet,” you are trying to reduce risk if the market moves against your Spot bag.
When This Use Case Makes Sense
This setup is useful when:
You hold a coin on Spot and do not want to sell it yet
You are worried about a possible short term drop in price
Your exchange account supports Futures for that pair
Examples:
You have 1 BTC on a Spot account and want to hold it for an extended period of time or it is part of your investment portfolio
You expect a sharp news event or resistance level that could cause a pullback
You want to limit the short term downside without closing your Spot position
Important
Futures and hedging are advanced topics and do not remove risk.
You can still lose money if the hedge is too big, badly timed, or if funding payments and fees eat into your balance. Only use this approach if you already understand Futures basics and your own risk tolerance.
What You’ll Need
Before you start, you should have:
A Spot account on a supported exchange with coins you want to protect
Example: BTC on Binance Spot
A Futures account on the same exchange, connected to 3Commas
Example: Binance Futures USDT-M
A basic understanding of:
What a Short position is
Leverage, margin, and liquidation price
Funding payments on perpetual Futures
Only continue if:
You understand that Futures are leveraged and can be liquidated
You are comfortable with the risk of using Futures as a hedge
You accept that fees and funding payments can reduce or even wipe out hedge profits over time
What about Hedge Mode
For the simple use case in this article (Spot long + Futures short), you do not need Hedge Mode.
Hedge Mode is only required if you want to hold long and short on the same Futures contract at the same time (for example, both a long and a short position open on BTCUSDT Perpetual).
If you only plan to keep your Spot coins and open a single Short position on the Futures contract as a hedge, then One Way Mode is fine and you can follow this guide as is.
Simple Example: Hedge 1 BTC Spot with a Small BTC Short
We will use a simple example:
You hold 1 BTC on Spot
Current BTC price is 60,000 USDT
You want to protect part of your downside if price drops to 55,000 USDT
You decide to open a Short on Futures using SmartTrade
The idea:
If BTC price drops, your Spot position loses value
At the same time, your Short Futures position gains value
The gain on the hedge can partially offset the loss on Spot
You can keep the profit (usually a stablecoin like USDT or USDC) for other trading activity
Alternatively, you can use the profit to accumulate more BTC for your long term strategy or investment portfolio.
You choose how big the hedge is:
Small hedge: softens the blow but does not fully neutralize it
Larger hedge: protects more, but can also reduce profits if the price goes up instead
Step by Step: Create the Hedge SmartTrade
A. Open SmartTrade on the Futures account
Go to SmartTrade from the left menu.
At the top, select:
Your Futures exchange account
The market and trading pair you want to hedge, for example BTCUSDT/USDT
Choose Smart Short for the trade direction.
B. Choose entry and position size
There are different ways to enter. To keep it simple:
Use a Market entry if you want to hedge immediately at the current price
Or a Limit / Conditional entry if you only want to hedge after price moves to a certain level
For this use case, we’ll hedge immediately:
Select Market.
Set the position size for the hedge.
Example:
You hold 1 BTC on Spot
You decide to hedge 0.5 BTC worth on Futures
With 1x leverage, that would be a 0.5 BTC notional Short
With higher leverage, your margin will be smaller, but risk of liquidation will be higher
Tip: You do not have to hedge the full Spot position. Partial hedges are often more comfortable because they reduce some risk without fully cancelling your long term view.
C. Add Take Profit for the hedge
Now tell SmartTrade when to close the Short in profit. In this example, you want the hedge to help if price drops to around 55,000 USDT. Open the Take Profit section.
Set:
Order Type: Limit or Market
Take Profit price or percentage, for example -8% from entry (roughly 55,000 if you entered at 60,000)
You can use:
A single Take Profit target for a clean hedge
Or Multiple Take Profit targets if you want to scale out as price falls
For a simple hedge, a single TP is usually enough.
D. Add Stop Loss to protect against price increases for BTC
Remember, if price increases by 10% and the hedge closes with Stop Loss at 3%, you are still 7% in profit on your Spot account, which helps offset the hedge loss.
Open the Stop Loss section.
Set:
Order Type: Conditional Market (so the hedge closes quickly if wrong)
Stop Loss price or percentage, for example +3% above entry
Optional:
Use Move to Breakeven if price first moves a bit in your favor
Use Trailing Stop Loss if you want the hedge to follow the price as it moves in your favor
Example:
Enter Short at 60,000
TP at 55,000
SL at 61,800
If price jumps above 61,800, the hedge closes and you keep your full Spot exposure.
Note: Stop Loss and Take Profit tools help reduce risk, but they do not guarantee an exact exit price, especially in fast or illiquid markets.
E. Review and Create the SmartTrade
Before you click Create Trade, check:
Direction: Short
Entry type and size: for example Market, 0.5 BTC
Take Profit: where you will close the hedge in profit
Stop Loss: where you will cut the hedge if wrong
Estimated PnL and risk/reward in the SmartTrade summary box
When ready:
1. Click Create trade.
2. Confirm the settings.
Your hedge SmartTrade is now live on the Futures account.
How the Hedge Works in Practice
Let’s look at two simple outcomes and see what happens to both positions and your net result.
A. Price drops to 55,000
Spot 1 BTC:
Value drops from 60,000 → 55,000
Unrealized loss: -5,000 USDT
Short 0.5 BTC hedge:
Enters at 60,000, closes at 55,000
Price move: 60,000 - 55,000 = 5,000
Profit on 0.5 BTC: 0.5 × 5,000 = +2,500 USDT (before fees and funding)
Net effect (ignoring fees and funding for simplicity):
Spot: -5,000
Hedge: +2,500
Net: -2,500 USDT
Even though you see an unrealized loss on Spot, you can say the hedge protected 2,500 USDT of your BTC’s value. Without a hedge, your Spot value would show a 5,000 USDT drop. With the hedge, the effective drop is reduced to 2,500 USDT.
B. Price rises to 62,000
Spot 1 BTC:
Value increases from 60,000 → 62,000
Unrealized gain: +2,000 USDT
Short 0.5 BTC hedge:
Price moves against you
If Stop Loss is at 61,800, the hedge closes there
Price move: 61,800 - 60,000 = 1,800
Loss on 0.5 BTC: 0.5 × 1,800 = -900 USDT (before fees and funding)
Net effect (again, ignoring fees and funding):
Spot: +2,000
Hedge: -900
Net: +1,100 USDT
You still make money because price went up, but a bit less than if you had no hedge.
This is the idea behind the strategy: you accept a small, controlled cost when the market moves up to reduce the loss if the market drops.
Managing the Hedge SmartTrade
Once the SmartTrade is live, you can:
Edit Take Profit or Stop Loss if the market changes
Close the hedge early at Market if you no longer need protection
Add or reduce funds if you want to change the hedge size (use with care)
When Not to Use This Strategy
Skip this use case if:
You are not comfortable with Futures, leverage, or liquidation risk
You do not understand funding payments or how they can eat into hedge profits over time
You are trying to “win on both sides” instead of using the Short purely as a risk reduction tool
Hedging is a tool, not a magic shield. It can make your trading more complex if you use it without a clear plan.