What are the position modes for Coinbase Futures?

Understanding Position Modes in Coinbase Futures

Coinbase Futures provides traders with distinct position modes that influence how they manage open positions in perpetual contracts. These modes determine whether a trader can hold both long and short positions simultaneously or must maintain a single directional exposure. The structure of these modes directly affects risk management, margin allocation, and trading strategy execution.

Hedged Mode: Flexibility in Directional Exposure

Traders operating under hedged mode can open both buy and sell positions at the same time. This flexibility supports complex strategies such as pairs trading, spread positioning, and dynamic hedging against market volatility.

Margin requirements are calculated separately for each leg of the trade. This means losses on one side do not automatically affect the liquidation threshold of the other, giving traders more control over capital deployment.

This mode suits users who run algorithmic systems or manually adjust hedges based on shifting market conditions. It enables fine-tuned risk mitigation without closing existing exposures.

With multiple active positions, tracking net exposure and profit/loss becomes more involved. Traders must use robust tools to avoid unintended leverage accumulation.

One-Way Mode: Simplified Directional Trading

In this mode, a trader can hold either a long or a short, but not both at the same time. Opening an opposite position will automatically close the existing one or result in a reduction of the current position size.

All long entries share a unified margin pool, as do all short entries. This streamlines capital efficiency when averaging into positions but reduces isolation between trades.

The combined entry price and size determine the effective break-even and liquidation levels. This simplifies risk assessment for traders focused on directional bets.

By limiting concurrent opposing positions, one-way mode reduces operational complexity and helps prevent conflicting orders from clashing within the same market.

Switching Between Position Modes

Coinbase Futures mandates that users fully exit their open contracts before switching between hedged and one-way modes. This prevents ambiguous state conflicts during transitions.

Once the mode is changed, traders need to re-establish their desired exposure. This creates a natural pause to reassess strategy alignment with the new structure.

Switching does not alter previously accrued funding rates or trade history. All records remain intact and accessible post-transition.

The option to change modes appears in the futures trading section of the Coinbase platform. Confirmation steps ensure users understand the implications before proceeding.

Frequently Asked Questions

Can I have different position modes for different futures contracts?

No. Coinbase Futures applies a single position mode globally across all contracts. Changing the mode affects every market available in the futures product suite.

Does hedged mode allow for reduced fees due to offsetting positions?

Fees are assessed per trade regardless of net exposure. Even if a long and short position balance out, each transaction incurs standard taker or maker fees independently.

What happens to open orders when switching position modes?

All pending orders are canceled when initiating a mode switch. Users must recreate their order book setup after re-entering the market under the new configuration.

Is there a limit to how often I can change position modes?

Coinbase does not impose a frequency restriction. However, each change requires closing positions and rebuilding the portfolio, making frequent switches impractical for active traders.