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What are position modes in crypto derivatives trading?

  • Updated

Position modes define how a derivatives exchange tracks long and short positions on the same contract. They shape risk management, capital efficiency, and strategy design. 

BitMEX supports two methods: One-Way Mode and Hedge Mode. 

In One-Way Mode (also called netting mode), long and short trades on the same contract net against each other. A 1 BTC long plus a 0.5 BTC short leaves a 0.5 BTC net long. One-way mode keeps PnL simple and suits trend-following traders and directional strategies. 

In Hedge Mode, long and short positions sit as two independent entries, each with its own entry price, PnL, and margin. Hedge mode supports arbitrage, multi-strategy execution, and tactical hedging against a core position. It suits experienced traders running swing strategies. 

Most exchanges block switching between modes when positions or active orders exist on the contract. BitMEX's Switch Mode removes the position constraint: open positions carry over into the new mode, though active orders still need to be cancelled before the switch.

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