ফিউচার ট্রেডিং

Hedge Mode

শেষ আপডেট: ১৫/১০/২০২৫

1.What Is Hedge Mode?

Hedge Mode is a feature that allows users to hold both long and short positions simultaneously on the same futures contract pair. Unlike One-Way Mode, positions in opposite directions do not offset each other. This mode is ideal for hedging risks or executing multiple trading strategies at the same time.
  • Why Use Hedge Mode?
    • Risk Hedging: Lock in short-term volatility risk while maintaining a long-term position.
    • Multi-Strategy Trading: Enables running trend-following, arbitrage, and short-term strategies simultaneously.
    • Capital Protection: Reduces liquidation risk during high-volatility market conditions through opposite positions.

2.Difference Between Hedge Mode and One-Way Mode

  • One-Way Mode
    • In the same futures contract pair, users can only hold a single-direction position. Buying increases long positions or decreases short positions, while selling increases short positions or decreases long positions. Users can also enable the “Reduce-Only” option to manage position reduction.
    • Best for: Simple operations, trend trading, or users who prefer straightforward position management.
  • Hedge Mode
    • Allows users to hold both long and short positions independently on the same futures contract pair.
    • Best for: Hedging, arbitrage strategies, and lock-position (hedged) trading.
  • Example:
    • In One-Way Mode: If a user holds 10 long BTCUSDT contracts and sells 5, the system merges them into a net 5 long position.
    • In Hedge Mode: The user can hold 10 long BTCUSDT and 5 short BTCUSDT simultaneously — the two positions do not offset each other.

3.Unique Advantages of KuCoin Futures Hedge Mode

  1. Optimized Margin Usage: When holding long and short positions at the same price level, margin is only required for the larger side.
    1. Example: If you hold 10 long and open 9 short contracts at the same price, the 9 short contracts will not consume additional margin (though sufficient balance is still required to place the order).
    2. Formula: Required Margin = max(Long Quantity × Mark Price / Leverage, Short Quantity × Mark Price / Leverage)
  2. Maintenance Margin Calculated Per Larger Side: Similar to the initial margin rule, the maintenance margin is also based only on the larger side position, improving capital efficiency.
    1. Formula Example: Maintenance Margin = max(Long Qty × Mark Price × (MMR + Fee Rate), Short Qty × Mark Price × (MMR + Fee Rate)) + min(Long Qty × Mark Price × Fee Rate, Short Qty × Mark Price × Fee Rate)
  3. Liquidation Handling: Under Cross Margin Mode, if liquidation is triggered while both long and short positions exist, the system will first offset opposing positions to minimize the user’s liquidation risk.
    1. Hedging Price: Mark Price
    2. Hedging Quantity: min(Long Quantity, Short Quantity)

4.How to Switch to Hedge Mode

On Web & App:
  1. Open the KuCoin Futures trading interface.
  2. Click the Settings icon in the top-right corner and go to [Preferences] → [Position Mode].
  3. In the pop-up window, select either One-Way Mode or Hedge Mode, then confirm and save.
    1. Note: You must close all open positions and cancel all active orders before switching modes.
Via API: KuCoin API Documentation – Switch Position Mode

5.Funding Fee Mechanism

Under Hedged Position Mode, the funding fee is charged based on the net position, and only one funding fee record is generated.
  • Cross Margin Mode: Funding Fee = (Short Position Quantity + Long Position Quantity) × Mark Price × Funding Rate
    • Long positions are positive (+), short positions are negative (−).
    • Whether you pay or receive funding depends on the direction of your net position (sum of long and short positions).
  • Isolated Margin Mode: Funding fees are charged separately for each isolated position, but only one combined funding fee record is generated — equal to the sum of funding fees for both sides.
    • Short Position Funding Fee = Short Mark Value × Funding Rate
    • Long Position Funding Fee = Long Mark Value × Funding Rate

6.Liquidation Price

When a user’s Risk Ratio reaches 100%, the system will trigger forced liquidation. The calculation logic for the liquidation price differs between Cross and Isolated Margin Modes.

6.1 Cross Margin Mode

In Cross Margin Mode, the liquidation price is for reference only. The displayed liquidation price is based on the larger side of the position (“dominant side”) — i.e., the side with the greater quantity — and represents the theoretical liquidation price when the margin on that side is reduced to the maintenance margin level. Actual liquidation occurs when the Risk Ratio reaches 100%.
  • Linear (USDT-Margined) Contracts Liquidation Price = Liquidation Value / (Dominant Side Position Quantity × Contract Multiplier)
  • Inverse (Coin-Margined) Contracts Liquidation Price = (Dominant Side Position Quantity × Contract Multiplier) / Liquidation Value
Where:
  • Liquidation Value = Dominant Side Mark Value − |Dominant Side Mark Value| × AMR / (1 − side × Maintenance Margin Rate − side × Taker Fee Rate)
  • AMR (Account Margin Ratio) = Total Cross Margin / ∑max(|Long Mark Value|, |Short Mark Value|)
  • Dominant Side Mark Value: When both long and short positions exist, the side with the larger quantity is used:
    • If Long Quantity > Short Quantity → use Long
    • If Short Quantity > Long Quantity → use Short
  • side parameter:
Type Long Short
USDT-Margined side = 1 side = -1
Coin-Margined side = -1 side = 1
Example Calculation
  • Contract: BTC/USDT Perpetual
  • Long Position: 10 contracts
  • Short Position: 5 contracts
  • Total Cross Margin: 100 USDT
  • Mark Price: 62,000 USDT
  • Contract Multiplier: 0.001
  • Maintenance Margin Rate (MMR): 0.5%
  • Taker Fee Rate: 0.06%
Calculation:
AMR = 100 / (62,000 × 0.001 × 10) = 16.129%
Liquidation Price = (62,000 × 0.001 × 10 − 62,000 × 0.001 × 10 × 16.129%) / (1 − 0.5% − 0.06%) / (0.001 × 10) = 52,292.70 USDT
Thus, the reference liquidation price for this account is 52,292.70 USDT.

6.2 Isolated Margin Mode

In Isolated Margin Mode, the liquidation price is calculated independently for each position.
  • Linear (USDT-Margined) Contracts Liquidation Price = [Open Value − Position Margin] / [Position Quantity × Contract Multiplier × (1 − side × Maintenance Margin Rate − side × Liquidation Fee Rate)]
  • Inverse (Coin-Margined) Contracts Liquidation Price = [Position Quantity × Contract Multiplier × (1 − side × Maintenance Margin Rate − side × Liquidation Fee Rate)] / [Open Value − Position Margin]
Parameter Definitions:
  • Open Value: Position Quantity × Open Price × Contract Multiplier
  • Position Margin: Margin allocated to the isolated position
  • Maintenance Margin Rate (MMR): Varies by risk limit tier
  • Liquidation Fee Rate: Additional fee charged upon liquidation
  • side parameter: definition same as above