Hedge Mode lets you hold a Long Position and a Short Position on the same Perpetual Contract at the same time, and it is enabled by default on this platform.

What Hedge Mode Is

Hedge Mode allows you to hold both a Long Position (a position that benefits when the price rises) and a Short Position (a position that benefits when the price falls) on the same Perpetual Contract trading pair at the same time. This platform supports Hedge Mode by default.

In Hedge Mode, your Long and Short Positions are displayed and calculated independently. You can manage opposing positions on the same contract at the same time, with each position serving a different trading strategy.

For example, you can hold a 1 XAU Long Position in the XAUUSD Perpetual Contract and also hold a 0.5 XAU Short Position at the same time. The two positions are shown as separate directional positions. You can add to, reduce, close, or set Take-Profit (TP) and Stop-Loss (SL) prices for each one independently.

Hedge Mode vs. One-way Mode

The key difference between Hedge Mode and One-way Mode is whether you can hold a Long Position and a Short Position on the same contract at the same time.

• - One-way Mode: Only one net position direction is allowed per contract. Buying increases a Long Position or reduces a Short Position. Selling increases a Short Position or reduces a Long Position.
• - Hedge Mode: Long and Short Positions can exist on the same contract at the same time. Opening a Long Position and opening a Short Position each form an independent directional position. They are not netted automatically.
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How Orders Work in Hedge Mode

In Hedge Mode, every order must specify whether it opens or closes a position, as well as the direction:

• - Buy to Open Long increases the Long Position.
• - Sell to Close Long decreases the Long Position.
• - Sell to Open Short increases the Short Position.
• - Buy to Close Short decreases the Short Position.
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For example, suppose you have no XAUUSD position:

1. 1. Submit a Buy to Open Long order for 1 XAU. This creates a 1 XAU Long Position.
2. 2. Submit a Sell to Open Short order for 0.5 XAU. This adds a 0.5 XAU Short Position.
3. 3. You now hold a 1 XAU Long Position and a 0.5 XAU Short Position at the same time.
4. 4. Submit a Sell to Close Long order for 0.3 XAU. The Long Position decreases to 0.7 XAU. The Short Position is unaffected.
5. 5. Submit a Buy to Close Short order for 0.2 XAU. The Short Position decreases to 0.3 XAU. The Long Position is unaffected.
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How Profit and Loss (PnL) Is Calculated

In Hedge Mode, the PnL (profit and loss) of your Long Positions and Short Positions is calculated separately.

Long Position PnL. A Long Position typically makes a profit when the price rises and a loss when the price falls. For example, if you open a Long Position in XAUUSD at 6,000 USD:

• - If the price rises to 6,100 USD, the Long Position shows an unrealized profit.
• - If the price falls to 5,900 USD, the Long Position shows an unrealized loss.
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Short Position PnL. A Short Position typically makes a profit when the price falls and a loss when the price rises. For example, if you open a Short Position in XAUUSD at 6,000 USD:

• - If the price falls to 5,900 USD, the Short Position shows an unrealized profit.
• - If the price rises to 6,100 USD, the Short Position shows an unrealized loss.
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Common Uses of Hedge Mode

Managing different strategies on the same contract. You can keep Long and Short Positions on the same contract at the same time to separate different trading strategies. For example, you may have a long-term bullish view on XAUUSD but expect a short-term pullback. In that case, you can keep your existing Long Position and open a partial Short Position to manage the short-term strategy.

Managing each directional position independently. Because Long and Short Positions are independent in Hedge Mode, you can set TP/SL, add to, or reduce each position separately. For example, you can set a take-profit price on the XAUUSD Long Position and a stop-loss price on the XAUUSD Short Position.

Navigating range-bound markets. When price volatility is high or the market direction is unclear, some users set up both Long and Short Positions across different price ranges to adapt to changing market conditions.

Holding both a Long Position and a Short Position at the same time does not eliminate risk. Market volatility, funding costs, trading fees, and margin usage can all affect your account equity.

How to Close Positions in Hedge Mode

In Hedge Mode, you must select the correct position direction when you close a position:

6. 1. To reduce a Long Position, use Sell to Close Long.
7. 2. To reduce a Short Position, use Buy to Close Short.
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Selecting an open-position direction does not reduce an existing position. Instead, it may add a new position in the opposite direction.

For example, suppose you hold a 1 XAU XAUUSD Long Position and a 0.5 XAU Short Position:

• - To close 0.3 XAU of the Long Position, select Sell to Close Long for 0.3 XAU.
• - To close 0.2 XAU of the Short Position, select Buy to Close Short for 0.2 XAU.
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If you mistakenly select Sell to Open Short for 0.3 XAU, the Long Position is not reduced. The Short Position increases instead.

Setting Take-Profit and Stop-Loss in Hedge Mode

In Hedge Mode, you can set TP/SL for Long and Short Positions independently.

• - Long Position: The take-profit price is typically set above the entry price, and the stop-loss price is typically set below it.
• - Short Position: The take-profit price is typically set below the entry price, and the stop-loss price is typically set above it.
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For example, if you hold both an XAUUSD Long Position and an XAUUSD Short Position:

• - The Long Position can have a take-profit for upside moves or a stop-loss for downside moves.
• - The Short Position can have a take-profit for downside moves or a stop-loss for upside moves.
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TP/SL for each direction applies only to the corresponding position. Before you confirm, check the position direction, the trigger price, and the close quantity.

Margin and Risk in Hedge Mode

In Hedge Mode, a Long Position and a Short Position point in opposite directions. Each one typically uses its own margin (the funds held in your account to support an open position) and carries its own price risk.

Holding both positions does not fully offset risk. You may still face the following:

8. 1. Each position incurs its own trading fees and funding costs.
9. 2. Each directional position may generate its own unrealized PnL.
10. 3. During sharp market moves, one directional position may face insufficient margin or forced liquidation (the platform closing a position because there is not enough margin to support it).
11. 4. With high leverage, small price movements can have a large effect on account equity.
12. 5. The larger the position size, the higher the potential margin usage and risk exposure.
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Key Points

• - Hedge Mode lets you hold Long and Short Positions on the same contract at the same time.
• - Long and Short Positions are displayed separately, their PnL is calculated independently, and each can be closed individually.
• - Always confirm the position direction when you close a position, so you do not accidentally open a new position in the opposite direction.
• - For a Long Position, the take-profit is typically above the entry price and the stop-loss below it. For a Short Position, it is the reverse.
• - Holding both positions does not mean there is no risk. Trading fees, funding costs, margin usage, and forced liquidation remain possible concerns.
• - Set your position size, leverage, margin mode, and TP/SL according to your own risk tolerance.
• - Perpetual Contracts are leveraged products. Price volatility can lead to insufficient margin and forced liquidation. Trade with caution.