Hedge Mode allows futures traders to hold a long and a short position on the same trading pair simultaneously. It becomes especially useful when you want to reduce directional exposure without immediately closing your existing position. For a deeper look at one of the main costs involved in holding perpetual positions, see our guide to crypto funding rates.
The important distinction is that Hedge Mode is a position-management feature, not a risk-free trading strategy. Holding opposite positions can offset some price exposure, but each position still has its own margin, fees, funding costs, and liquidation considerations.
What Is Hedge Mode in Crypto Futures?
Hedge Mode is a futures position mode that allows you to keep both a long and a short position open on the same trading pair.
In One-Way Mode, opening an opposite position generally reduces, closes, or reverses the existing position.
In Hedge Mode, the two positions remain separate.
For example, suppose you already hold a 1 BTC long position on BTC/USDT. Instead of closing the long when you expect short-term downside, you can open a 0.5 BTC short position in Hedge Mode.
Your resulting exposure is:
This is a partial hedge.
You could also open a 1 BTC short against the 1 BTC long, creating a roughly delta-neutral position before considering basis, fees, funding, execution differences, and contract mechanics.
Binance describes the distinction similarly: Hedge Mode allows simultaneous long and short positions under the same futures contract, while One-Way Mode permits only one position direction.
Hedge Mode vs. One-Way Mode
The difference looks simple on the trading screen, but it changes how you manage positions.
Feature | Hedge Mode | One-Way Mode |
Long and short on same pair | Yes | No, opposing orders generally offset the existing position |
Position management | Long and short managed separately | Position managed as one net direction |
Partial hedge | Possible | Requires reducing or closing the existing position |
Multi-leg strategies | More suitable | More limited |
Operational complexity | Higher | Lower |
Funding exposure | Each open leg can have funding implications | Based on the net position and applicable rules |
Best suited to | Hedging, event risk, multi-leg setups | Straightforward directional trading |
The main advantage isn't that Hedge Mode automatically makes a trade safer. It gives you more control over how different market views coexist in the same contract.
3Commas' current 2026 documentation also describes Hedge Mode as a way to hold both long and short positions, while warning that it can increase complexity, fees, funding costs, and margin usage.
How Does Hedge Mode Work?
Hedge Mode separates long and short exposure instead of automatically netting them into a single position.
A basic workflow looks like this:
Enable Hedge Mode for the relevant futures account or contract.
Open a long or short position.
Open the opposite position without closing the first one.
Monitor the two positions separately.
Adjust or close either side according to the strategy.
Account for funding, fees, margin requirements, and liquidation conditions throughout the trade.
The two positions can have different:
That separation is what makes Hedge Mode useful for strategies that operate on different time horizons.
A Simple Partial Hedge Example
Suppose BTC is trading at $100,000 and you hold a 1 BTC long position.
You expect the longer-term trend to remain constructive, but you also expect short-term volatility around an upcoming market event.
Instead of closing the long, you could open a 0.4 BTC short position.
Your exposure becomes:
1 BTC long - 0.4 BTC short = 0.6 BTC net long exposure
If BTC falls, the short position offsets part of the long's loss.
If BTC rises, the long position remains larger than the short, so the combined position still has positive directional exposure.
This is different from a full hedge, where the long and short sizes are equal.
Full Hedge vs. Partial Hedge
The hedge ratio determines how much of your original exposure is offset.
Hedge Type | Example | Approximate Net Exposure |
No hedge | Long 1 BTC | +1 BTC |
25% hedge | Long 1 BTC + Short 0.25 BTC | +0.75 BTC |
50% hedge | Long 1 BTC + Short 0.5 BTC | +0.5 BTC |
100% hedge | Long 1 BTC + Short 1 BTC | 0 BTC |
These figures describe directional exposure only. They don't account for fees, funding, basis, slippage, or differences in contract specifications.
A partial hedge is often more practical when the goal is to reduce exposure rather than eliminate it.
A full hedge can substantially reduce directional sensitivity, but it also means the two positions may generate costs without providing additional directional exposure.
Why Use Hedge Mode in Futures Trading?
Hedge Mode can be useful in several situations, but the reason for opening the second leg should be clear before the trade is placed.
1. Hedge an Existing Position
The most straightforward use is protecting part of an existing position.
For example, a trader holding a long BTC futures position may open a smaller short position when short-term downside risk increases.
The hedge can reduce the portfolio's sensitivity to a price decline without requiring the original long to be closed.
2. Manage Event Risk
Major economic releases, regulatory announcements, token unlocks, network upgrades, or other scheduled events can create short-term volatility.
A trader with an existing position may want to temporarily reduce directional exposure rather than exit the position completely.
Capital.com's current guide gives a similar example: traders can use Hedge Mode to temporarily reduce exposure while keeping their original position open.
3. Trade Different Time Horizons
Hedge Mode can also separate a longer-term view from a shorter-term trade.
For example:
Long BTC for a broader market view
Short BTC temporarily during a short-term pullback
Close the short when the short-term setup ends
Keep the original long position open
Without Hedge Mode, opening the short may simply reduce or reverse the original position.
4. Build Market-Neutral Positions
A trader can use equal or near-equal long and short positions to reduce directional exposure.
This can be useful for strategies involving:
Funding-rate arbitrage
Basis trades
Spread structures
Event-driven hedges
The key is that market-neutral doesn't mean risk-free. Funding can change, spreads can widen, execution can differ between legs, and either position may still have margin requirements.
Hedge Mode and Funding Rates
Funding becomes especially important when Hedge Mode is used with perpetual futures.
If you hold both a long and a short perpetual position, the funding payment on each leg depends on the contract's funding rules and the size of that position.
Suppose:
Long position: $50,000 notional
Short position: $30,000 notional
Funding rate: +0.01%
If the long side is paying funding and the short side is receiving funding:
Long funding cost: $50,000 × 0.01% = $5
Short funding received: $30,000 × 0.01% = $3
Net funding effect: approximately -$2 for that funding event
This is a simplified illustration. Actual funding calculations vary by platform, contract, funding interval, and pricing methodology.
For a full hedge with equal notional exposure, funding received on one side may offset funding paid on the other when the same rate applies. But the result isn't necessarily zero because platforms can use different rules, position sizes can change, and funding rates can change between payment events.
That's why traders using Hedge Mode for funding-based strategies should monitor the funding rate, funding interval, and notional size of each leg, rather than assuming the hedge cancels all carrying costs.
Hedge Mode for Funding-Rate Arbitrage
One of the more advanced applications of Hedge Mode is managing multi-leg trades designed to reduce directional exposure while capturing differences in funding or pricing.
A common structure is:
Hold BTC in the spot market.
Open a short BTC perpetual position of similar notional value.
The spot position provides long BTC exposure.
The perpetual short offsets much of that directional exposure.
If the perpetual funding rate is positive, the short may receive funding.
Monitor the hedge ratio, funding rate, basis, fees, and margin throughout the trade.
This is often described as a delta-neutral funding strategy.
The important point is that the hedge is between different instruments rather than simply opening a long and short on the same perpetual contract.
For example, holding:
creates roughly neutral BTC price exposure before costs and tracking differences.
The return then depends on factors such as:
Funding can also turn negative. If that happens, the short perpetual leg may become a funding expense rather than a source of income.
Hedge Mode is the position-management infrastructure. The arbitrage strategy itself still needs its own risk controls.
Can You Profit From Both Long and Short Positions?
Not simply because both positions are open.
This is one of the most common misunderstandings about Hedge Mode.
If you open equal long and short positions on the same contract at roughly the same price, a subsequent price move will generally produce a gain on one side and a loss on the other.
For example:
If BTC rises by $2,000:
If BTC falls by $2,000, the result is reversed.
So where can a strategy generate a return?
Potential sources include differences in entry and exit prices, funding payments, basis changes, or other spread relationships.
That is very different from saying that Hedge Mode lets a trader "profit in both directions."
How to Use Hedge Mode on Bitunix
Bitunix's current API documentation confirms that Hedge Mode uses separate long and short trade directions, with OPEN and CLOSE instructions for managing the two sides.
For the trading interface, the exact menu labels and workflow can change as the product is updated. The general process is:
Step 1. Open the Futures Trading Interface
Select the futures contract you want to trade and open the position-mode settings.
Step 2. Switch to Hedge Mode
Select Hedge Mode instead of One-Way Mode if your account and selected contract support it.
Don't assume the setting is enabled by default. The original version of this article made that claim, but position-mode availability and default settings can change with product updates.
Step 3. Check Your Available Margin
Make sure your futures account has enough available margin for the positions you plan to open.
Remember that holding two positions doesn't necessarily mean the margin requirement is simply doubled. The actual requirement depends on the platform's margin model, position sizes, leverage, and account configuration.
Step 4. Open the First Position
Choose the direction, order type, size, leverage, and applicable risk controls.
Step 5. Open the Opposite Position
If your strategy requires a hedge, open the opposite side separately.
For example:
Open Long BTC/USDT
Open Short BTC/USDT
The two positions should appear separately when Hedge Mode is active.
Step 6. Manage Each Leg Independently
Monitor the entry price, unrealized P&L, funding, margin, and liquidation information for each side.
Bitunix's futures position data includes separate long/short direction, position mode, margin mode, leverage, funding, unrealized P&L, and estimated liquidation price fields.
Step 7. Close the Hedge in Stages if Needed
You don't have to close both sides at once.
For example, you might close the short hedge after the temporary risk has passed while keeping the original long open.
This is one of the main practical differences between Hedge Mode and One-Way Mode.
Hedge Mode, Margin Mode, and Multi-Trade Are Different
These features can appear together in a futures interface, but they solve different problems.
Feature | What It Controls |
Hedge Mode | Whether long and short positions can coexist on the same trading pair |
One-Way Mode | Whether the account maintains a single net directional position |
Cross Margin | How available account margin is shared across positions |
Isolated Margin | How margin is allocated to an individual position |
Multi-Trade | Whether multiple positions in the same direction can remain independent |
This distinction matters because turning on Hedge Mode doesn't automatically determine whether a position uses Cross or Isolated Margin.
Bitunix's current documentation lists both HEDGE / ONE_WAY as position modes and CROSS / ISOLATION as margin modes.
Bitunix's newer Multi-Trade feature is also separate: it allows multiple independent positions in the same direction and currently requires Single-Currency Hedge Mode to be active.
Risks of Using Hedge Mode
Hedge Mode changes position management. It doesn't remove the underlying risks of futures trading.
Funding Costs
Each perpetual position can have funding implications.
A hedge can offset some funding exposure, but it doesn't guarantee that funding costs will cancel.
Trading Fees
Opening two positions means there may be more executions and transaction fees than running a single position.
The bid-ask spread also matters when entering and exiting both legs.
Margin Usage
Two positions can require additional margin depending on the exchange's risk engine and margin model.
Don't assume a long and short position automatically neutralize all margin requirements.
Liquidation Risk
One side of a hedge can still approach liquidation if its margin conditions aren't met.
A hedge therefore shouldn't be described as a way to “protect funds from forced liquidation.” The original article used that wording, but TP/SL orders and opposing positions don't guarantee that a position cannot be liquidated.
Execution Risk
A hedge only works as expected if both legs are executed at usable prices.
Fast markets can create slippage, spread expansion, or timing differences between the two orders.
Strategy Complexity
Hedge Mode gives you more control, but that also means more variables to monitor.
You now need to track two entry prices, two position sizes, separate P&L, funding, margin, and exit conditions.
3Commas explicitly warns that Hedge Mode can increase complexity and trading costs, including fees, funding, and margin usage.
Common Hedge Mode Strategies
Hedge Mode can support several different approaches.
Partial Hedge
Use an opposite position that is smaller than the original position.
Example:
Long 1 BTC + Short 0.5 BTC = approximately 0.5 BTC net long exposure.
This reduces directional exposure without fully removing it.
Event Hedge
Maintain an existing position while temporarily opening an opposite position around a scheduled event.
The hedge can then be removed after the event-driven risk changes.
Trend + Short-Term Hedge
A trader can maintain a longer-term position while using the opposite side for shorter-term market movements.
The two positions can have different entry and exit rules.
Funding-Rate Strategy
A trader can combine spot and perpetual positions to reduce directional exposure and potentially capture funding differences.
This requires careful monitoring because funding rates change and the hedge has carrying and execution costs.
Spread or Basis Strategy
Long and short positions can be used across related instruments where the trader is targeting the difference between their prices rather than the absolute direction of the underlying asset.
These are more advanced strategies and require a clear understanding of basis, funding, margin, and execution.
Common Hedge Mode Mistakes to Avoid
1. Thinking Hedge Mode Means Risk-Free
A long and short position can offset directional P&L, but fees, funding, slippage, margin, and liquidation risk remain.
2. Opening Equal Positions Without a Purpose
A 1 BTC long and 1 BTC short on the same perpetual contract mostly cancel directional exposure.
If there is no separate strategy behind the two legs, you're potentially adding costs without changing the underlying outcome.
3. Ignoring Funding
A hedge held for a long time can accumulate funding costs.
Check the funding rate and interval before assuming that the position is cheap to maintain.
4. Using Too Much Leverage
A hedge doesn't make high leverage safe.
Each position still interacts with the exchange's margin and liquidation system.
5. Forgetting the Hedge Ratio
A 25% hedge and a 100% hedge produce very different net exposures.
Calculate the remaining directional exposure before opening the second leg.
6. Closing the Wrong Leg
Because the positions are independent, closing one side can materially change the account's net exposure.
Always check what your remaining position looks like after closing one leg.
7. Assuming TP/SL Eliminates Liquidation Risk
TP/SL can help define an exit plan, but execution conditions and liquidation rules still apply.
A stop order isn't a guarantee that a position will close at the exact trigger price during extreme market conditions.
When Should You Use Hedge Mode?
Use Hedge Mode when you have a specific reason to maintain long and short exposure separately.
It makes the most sense when:
You want to partially hedge an existing position.
You want to maintain a core position while taking a shorter-term opposite trade.
You're managing exposure around a known event.
You're building a multi-leg or market-neutral strategy.
You need separate entry, exit, or risk rules for the two sides.
It may add unnecessary complexity when you're simply taking a straightforward long or short position.
For basic directional futures trading, One-Way Mode can be easier to manage because the account maintains one net position rather than two independent legs.
A Practical Hedge Mode Checklist
Before opening both sides of a futures position, ask:
What is the purpose of the hedge?
What percentage of my original exposure am I offsetting?
What is the net exposure after both positions are open?
What funding will each perpetual position pay or receive?
What fees and spreads will the two legs incur?
Which margin mode am I using?
What happens if one side reaches its liquidation threshold?
When will I remove the hedge?
What happens to my net exposure after closing one side?
If you can't answer those questions, opening the second leg probably isn't enough of a strategy by itself.
Conclusion
Hedge Mode is best understood as a position-management tool, not a strategy that automatically makes futures trading safer.
Its main advantage is straightforward: you can keep a long and a short position open on the same futures contract and manage each side independently. That makes partial hedging, event-risk management, multi-timeframe positioning, and more advanced market-neutral structures possible.
The trade-off is additional complexity. Funding, fees, margin, liquidation, execution, and hedge ratio all matter.
For advanced futures traders, the real value of Hedge Mode comes from what you build around it. A clearly defined hedge ratio and exit plan can make the two-sided structure easier to manage. Without that plan, opening opposite positions can simply create more transactions and more costs.
