What is one-way mode vs hedge mode on Bybit? A Bybit position mode tutorial.

Understanding Position Modes on Bybit

Bybit offers two primary position modes for traders: One-Way Mode and Hedge Mode. These modes define how positions are managed within a trading account, especially when dealing with perpetual and futures contracts. Choosing the correct mode impacts order execution, risk exposure, and profit potential.

One-Way Mode Explained

In One-Way Mode, a user can hold only one open position per symbol at any given time. This means that if you already have a long position on BTC/USDT, placing another long or short order will modify or close the existing position rather than opening a new independent one.

1. Orders in this mode act as adjustments to the current position.
2. Closing part of a position reduces the overall size without creating offsetting trades.
3. Entry prices and liquidation prices are averaged when adding to an existing position.
4. It is ideal for traders who follow directional strategies and prefer simplified position tracking.
5. Liquidation risk is centralized since all contracts contribute to a single position’s margin usage.

Hedge Mode Explained

Hedge Mode allows traders to maintain both long and short positions simultaneously for the same trading pair. Each position operates independently, enabling more complex trading strategies such as hedging against market volatility or running arbitrage tactics.

1. A long and a short position on BTC/USDT can coexist without offsetting each other.
2. Each position has its own entry price, leverage, and liquidation price.
3. Traders can manage risk by keeping opposing positions active during uncertain market conditions.
4. More suitable for advanced users who want flexibility in managing multiple entries and exits.
5. Margin is allocated separately to each individual position, increasing capital efficiency under controlled risk.

Switching Between Modes

Traders can switch between One-Way and Hedge Mode, but certain conditions must be met before doing so. The most critical requirement is that there should be no open positions or pending orders on the selected symbol.

1. Navigate to the contract interface and locate the position mode indicator.
2. Click on the current mode (either One-Way or Hedge) to initiate the change.
3. Confirm the switch after ensuring all active trades are closed.
4. Once switched, all future orders will follow the rules of the new mode.
5. Note that switching affects all symbols within the same product type (e.g., USDT-margined contracts).

Frequently Asked Questions

Can I use different position modes for different trading pairs on Bybit?Yes, Bybit allows you to set One-Way or Hedge Mode independently for each product category. For example, you can use Hedge Mode for BTC/USDT and One-Way Mode for ETH/USDT, provided they fall under separate contract types or isolated settings.

Does Hedge Mode increase my liquidation risk?Not inherently. While Hedge Mode allows multiple positions, each carries its own margin and liquidation threshold. However, improper fund allocation across positions can lead to higher overall risk if not monitored closely.

Is it possible to change position mode during high market volatility?Technically yes, but only if there are no open positions or conditional orders. During volatile periods, traders often have active orders, making immediate mode changes impractical without first closing all exposures.