What are One-Way Mode and Hedge Mode in the context of futures trading?

What is One-Way Mode?

One-Way Mode refers to a specific position mode setting. When you set your position mode to  One-Way Mode, you can only hold one direction,either long or short. This mode offers a straightforward way to manage your position, allowing you to change your position size and direction with ease.

What is Hedge Mode?

Hedge Mode is an alternative position mode setting. When activated, you can simultaneously hold two positions in opposite directions (both long and short). This mode is beneficial for users wanting to lock in unrealized P&L without closing their positions.

Liquidation Mechanisms for One-Way Mode and Hedge Mode

Regardless of the position mode you choose, you must maintain collateral as position margin. Even in a fully hedged situation in Hedge Mode, collateral is still required. Should your margin balance value fall below the required position margin, your positions will be liquidated.

In Hedge Mode, if you hold opposite positions in a market, the liquidation price will be the same for both the long and short positions. Your positions will be liquidated if the mark price reaches the liquidation price.

Partial Liquidations in Hedge Positions

In the event of partial liquidation during Hedge Positions, the system will prioritize closing your fully hedged positions. If your margin remains insufficient after closing all fully hedged positions, the liquidation engine will continue to close additional positions.

Position Margin Mechanisms in Hedge Mode

The position margins differ between fully hedged positions and non-fully hedged positions, even if the size is the same. Please exercise caution when opening or closing your positions, especially if these actions alter your hedged status (fully hedged or non-fully hedged).

Limitations on Switching Position Modes

You are not allowed to switch your position mode while you have existing positions or active orders in the market.

*All of the position mode settings of a particular contract are independent of other contracts, you can select different position modes for different assets*