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What Are The Benefits Of Trading Using Hedge Mode?

Author: Jeffrey Craig Date: November 18, 2022

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During extremely volatile market conditions, traders need to explore additional trading strategies and expand their trading arsenal to include more risk management, portfolio diversification, and hedging practices. These types of trading strategies allow traders to take advantage of both falling and rising markets – and allow traders to not be burned by all-in bets.

Hedge Mode

Hedging, in particular, is a good risk management strategy that traders can use to offset investment losses. Hedging essentially allows traders to ride the fence and profit from market volatility.

To cater to this demand, Phemex has just released a new Hedge Mode for contract trading to allow investors to hedge their trades by opening both long and short positions simultaneously.

What Is Hedge Mode?

Hedge mode is a contract trading feature that allows traders to open and hold both long and short positions simultaneously.

Hedge Mode Strategy

Hedge mode is typically used to minimize the potential losses and protect trading positions regardless of what the market conditions are like. Essentially, the primary motivation to hedge is to mitigate potential losses for an existing trade in the event that it moves in the opposite direction than what you want it to.

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All About The New Phemex Hedge Mode

With Phemex’s new Hedge Mode traders can hold multiple directional positions under one futures. For example, if a trader believes Bitcoin will go down in the short-term, but rise in the long-term, hedge mode will allow that trade to open a short position and a long position. This is essentially an improve to One-way Mode.

In addition, with Phemex’s Hedge Mode, traders can adjust the leverage on their short and long positions, whereas on other exchanges this level of customization isn’t available.

The trading pairs available to use in Hedge Mode are BTC, ETH, XRP, ADA, and SOL. These coins are some of the best in terms of liquidity and trading volume, thus, traders should find using the Hedge Mode function on them simple and profitable.


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