How to hedge positions on Bybit futures?

Hedging on Bybit futures lets traders open opposite positions to reduce risk—ideal for volatile markets. Switch to Hedge Mode, manage margin per position, and use stop-loss/take-profit orders to protect gains.

Jul 23, 2025 at 06:49 pm

Understanding Futures Hedging on Bybit

Hedging on Bybit futures involves opening opposite positions in the same or related assets to reduce potential losses from adverse price movements. Traders often use this strategy when market volatility is high or when they want to lock in profits without closing their original position. For example, if you hold a long position on BTC/USDT perpetual contracts, you can open a short position of the same size to neutralize directional risk. This method is especially effective in Bybit’s inverse and linear contracts, where both sides of the market can be accessed simultaneously within the same account.

Setting Up a Hedge Mode Account

Before executing any hedge, ensure your Bybit account is in Hedge Mode—not One-Way Mode. To switch:

• Log in to your Bybit account
• Navigate to the Futures tab
• Select the contract you're trading (e.g., BTC/USDT)
• Click the position mode button (usually shows "One-Way")
• Choose "Hedge Mode" from the dropdown
  This setting allows both long and short positions to coexist for the same symbol. Without this, attempting to open an opposite position will close or reduce your existing one.
  

  Step-by-Step: Opening a Hedge Position

  
  To hedge an existing futures position:
• Identify your current position (e.g., 0.1 BTC long at $60,000)
• Go to the same futures contract page
• Place a new order in the opposite direction with the same quantity
• Set order type: Limit or Market depending on urgency
• Confirm the order details before submitting
  Bybit will now show two separate positions: one long, one short, each with its own unrealized P&L. The net exposure becomes neutral, minimizing impact from price swings.
  

  Managing Margin and Leverage in Hedge Mode

  
  Each position in Hedge Mode maintains its own isolated margin and leverage settings. This means:
• You must allocate sufficient margin to both the long and short positions
• Leverage can differ between positions (e.g., 10x on long, 20x on short)
• Liquidation is calculated per position, not as a net
  Monitor both positions closely. A sharp move may trigger liquidation on one side while the other remains profitable. Use Bybit’s margin calculator to estimate required collateral and avoid unexpected margin calls.
  

  Using Stop-Loss and Take-Profit in Hedged Positions

  
  Even with a hedge, risk management remains critical. Apply stop-loss and take-profit orders individually:
• For the long position, set a stop-loss below support and take-profit near resistance
• For the short position, set a stop-loss above resistance and take-profit near support
• Enable "Reduce Only" when setting these orders to prevent accidental position increases
  This ensures each side of the hedge can exit independently if market conditions change. Bybit allows setting these directly from the position panel or order form.
  

  Practical Example: Hedging During High Volatility

  
  Suppose you’re long 0.5 ETH at $2,500 and ETH is approaching a key resistance level ahead of a major news event. To hedge:
• Open a short position of 0.5 ETH at current market price
• Set stop-loss on long at $2,300 and on short at $2,700
• Let both positions run until the event passes
  If ETH drops to $2,200, your long loses money but your short gains more, offsetting the loss. If ETH rises to $2,800, your short loses but your long gains more. The hedge reduces net exposure while preserving the ability to profit from either direction post-event.
  

  Frequently Asked Questions

  Can I hedge across different futures pairs on Bybit?
  
  Yes, but it’s more complex. For example, hedging BTC/USDT with ETH/USDT requires correlation analysis. If both assets typically move together, a short ETH position may partially offset a long BTC position. However, this introduces basis risk—differences in price movement between the two assets—which must be monitored.

  What happens to funding fees when hedging perpetual contracts?
  
  You pay or receive funding fees on both positions separately. If you’re long and short the same perpetual contract, fees may cancel out if funding rates are stable. However, during high volatility, funding rates can diverge, leading to net costs or gains. Always check the funding rate schedule on Bybit’s contract page.

  Is hedging allowed in all Bybit account types?
  
  Hedging is only available in Hedge Mode, which is supported in both USDT and inverse perpetual contracts. It is not available in One-Way Mode or in spot trading. Ensure your account meets margin requirements for both positions to avoid forced liquidations.

  How do I close a hedge position correctly?
  
  Close each side independently:

  • First, close the hedge (e.g., the short position)
  • Then close the original position (e.g., the long)
    Avoid using "Close Position" buttons that might affect both. Always verify the remaining position size after each closure to prevent accidental exposure.