𝙏𝙝𝙚 𝙁𝙪𝙩𝙪𝙧𝙚𝙨 𝘾𝙤𝙣𝙩𝙧𝙖𝙘𝙩 𝙤𝙣 𝘽𝙞𝙣𝙖𝙣𝙘𝙚
Thsere are two ways of trading Futures within the Binance platform, each with its inherent benefits and risks. Understand each is critical to effectively trading futures and managing risks. Lets take a deep dive of the two modes:
𝟭. 𝗢𝗻𝗲 𝗪𝗮𝘆 𝗕𝗶𝗻𝗮𝗻𝗰𝗲 𝗙𝘂𝘁𝘂𝗿𝗲𝘀
One-way futures and hedge mode on Binance perpetual futures differ primarily in position flexibility and risk management. In One-Way Mode, traders can only hold a position in one direction (long or short) for a single contract at a time. For example, you can open a long position on BTCUSDT, but opening a short position on the same contract would cancel or reduce the existing position. This mode is simpler, suited for directional trading, but limits simultaneous opposite positions, increasing risk if the market moves unfavorably.
𝟮. 𝗛𝗲𝗱𝗴𝗲 𝗠𝗼𝗱𝗲
In contrast, Hedge Mode allows traders to hold both long and short positions on the same contract simultaneously, like 1 BTC long and 0.5 BTC short on BTCUSDT. This strategy mitigates risk by profiting from market movements in either direction while reducing potential losses. Hedge Mode requires manual activation and is ideal for volatile markets, offering greater flexibility and risk management.
𝗣𝗲𝗿𝘀𝗼𝗻𝗮𝗹 𝗥𝗲𝗳𝗹𝗲𝗰𝘁𝗶𝗼𝗻/𝗣𝗿𝗲𝗳𝗲𝗿𝗲𝗻𝗰𝗲
I prefer trading using hedge mode as it allows me to adjust my position in case it goes against my desired direction. When a position moves against my directioni usually open a position in the opposite direction and allow the two positions to run simultaneously. Once a move in one direction is exhausted, close it at a profit and allow the remaining to run to profit, before closing it.
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