Earnings Night: Hedge with an Offsetting Short

You like this company and hold 400 shares for the long term. But earnings are about to come out, and nobody knows how they'll land. Don't want to sell your long-term position? Open a short to hedge it, so the gains and losses offset each other for now.

Goal

You already hold a long position. Open an equal short before earnings to lock in your risk, then remove the hedge afterwards.

When earnings are released: still holding the original long, with net exposure no more than 20%
Maximum drawdown no more than 6%
No stop-out

Rules

Starting balance $20,000, leverage 1:5, spread 0.05.
You start with a long position of 400 shares.
Click “Next candle” or “Play” to reveal what happens next. You can't see future candles.
Review: What Is Hedging?, Hedge Ratio and Basis Risk, Going Long vs. Going Short

Risk warning: forex, CFDs, options, futures and crypto assets usually involve leverage or high volatility, and you can lose more than you put in. This lesson only teaches the concepts; all numbers are for illustration and are not investment advice.