What Is Hedge Mode?
Hedge mode allows traders to hold both long and short positions simultaneously for the same contract. This mode is useful for risk management, advanced trading strategies, and hedging existing positions without closing them.
Both institutional and experienced retail traders use this mode to:
- Better manage risks
- React quickly to changing market conditions
- Maintain multiple active positions within the same contract
Why Use Hedge Mode?
1. Risk Management in Volatile Markets
Hedge mode mitigates risks by maintaining opposing positions. In highly volatile markets, price movements can be unpredictable. Balancing long and short positions helps offset potential losses—ideal for traders seeking protection while capitalizing on market trends.
2. Simultaneous Long and Short Positions
Traders can execute strategies like arbitrage or market-neutral approaches without closing existing positions. For example:
- Arbitrage: Exploit price differences between markets.
- Hedging: Offset short-term price drops while holding long-term investments.
3. Ideal for Hedging Strategies
Traders use hedge mode to balance portfolios. For instance:
- A long-term holder anticipating short-term declines can open a short position to minimize losses.
How to Enable Hedge Mode
On the OKX Website
- Navigate to Trade > Futures.
- Click the Settings icon (gear symbol).
- Under Position Mode, select Hedge Mode.
- Confirm with Apply.
In the OKX App
- Open Trade > Futures.
- Tap Settings.
- Choose Hedge Mode under Position Mode.
- Confirm the changes.
Key Considerations
- Availability: Only for derivatives (futures/perpetual swaps).
- Switching Modes: Close all open positions before switching from One-Way Mode to Hedge Mode to avoid liquidation.
- Strategy Adjustments: Mode changes may require tactical updates.
FAQ
1. Can I use Hedge Mode for spot trading?
No. Hedge Mode is exclusive to derivatives like futures and perpetual contracts.
2. How does Hedge Mode protect against losses?
By holding opposing positions, losses in one trade may be offset by gains in another.
3. Is Hedge Mode suitable for beginners?
It’s advanced. Beginners should understand basic trading mechanics first.
Hedge Mode offers flexibility for sophisticated strategies and risk control. Optimize your trading approach by leveraging this feature on OKX.