1. What Is Futures Hedge Mode?
XT.COM's Futures Hedge Mode allows users to simultaneously hold long and short positions on the same contract in cross-margin mode. With positions of equal quantity, the profits from one position offset the losses from the other (or vice versa), thus achieving the goal of locking in profits or losses.
2. Full Hedge and Partial Hedge
2.1 Full Hedge
The full hedge means that the amount of the long and short positions of the same asset is exactly the same. Hedged positions will not be liquidated under normal circumstances but could occur in extreme scenarios. This is because the unrealized profit of one position can be used to offset the unrealized loss of the other. The full hedge serves the following main functions for the user:
- Price fluctuations will not increase the risk of forced liquidation of the contract.
- Price fluctuations will not impact account funds.
2.2 Partial Hedge
In a partial hedge, users establish long and short positions on the same contract with varying position amounts. The long and short positions are partially hedged, with the hedged amount equaling the lesser of the two positions. After a partial hedge, users will only realize the profit or bear the loss from the remaining long or short positions.