What is Hedging Mode?
Hedging mode allows traders to hold both long and short positions simultaneously on the same contract. This mode is useful for risk management, executing advanced trading strategies, and securing existing positions without closing them.
It is widely used by institutional and experienced retail traders to enhance risk control and quickly adapt to changing market conditions—all while maintaining multiple active positions within a single contract.
Why Should You Use Hedging Mode?
- Helps manage risk in volatile markets: Hedging mode enables traders to mitigate risk by holding long and short positions concurrently. In highly volatile markets, price movements can be unpredictable, and opposing positions help offset potential losses. This is particularly practical for traders who want to protect investments while participating in market fluctuations.
- Allows opening long and short positions on the same contract: Hedging mode lets traders open opposing positions simultaneously, benefiting advanced strategies like arbitrage or market-neutral approaches without needing to close existing positions first.
- Ideal for traders using hedging strategies to balance potential losses: Traders focused on risk management often use hedging mode to balance portfolios. For example, if holding a long-term long position but anticipating a short-term price drop, opening a short position can cover potential losses, ensuring profitability or minimizing downside risks while preserving long-term investments.
👉 Learn more about hedging strategies
How to Enable Hedging Mode on OKX
On the Website
- Navigate to Trade and select Futures Trading.
- In the trading interface, click Settings (gear icon).
- Locate Position Mode and select Hedging Mode.
- Confirm by clicking Apply or Confirm.
In the Mobile App
- Go to Trade > Futures Trading.
- Tap Settings.
- Select Position Mode > Hedging Mode.
- Apply changes.
Note:
- Hedging mode is only available for derivatives trading (futures and perpetual swaps).
- Switching from one-way mode to hedging mode requires no open positions to avoid forced liquidation.
- Changes may necessitate adjustments to your trading strategy.
FAQs
1. Can I switch back to one-way mode after enabling hedging?
Yes, but ensure all positions are closed to prevent liquidation risks.
2. Does hedging mode work for spot trading?
No, it’s exclusive to derivatives (futures/perpetual contracts).
3. How does hedging protect against volatility?
Opposing positions balance losses if the market moves unpredictably.
4. Are there fees for enabling hedging mode?
No, but standard trading fees apply per transaction.
5. Can I hedge across different contracts?
Yes, but each contract’s positions must be managed separately.
6. Is hedging suitable for beginners?
It’s advanced; beginners should master basic strategies first.
Enabling hedging mode enhances trade flexibility, empowering you to secure risks and execute sophisticated strategies effectively. For further guidance, explore OKX’s advanced trading tools.