Hedge Mode
OrangeBit’s Hedge Mode enables advanced traders to simultaneously hold both long and short positions on the same contract/symbol within the same account. This mode offers powerful flexibility for hedging strategies, market neutral positions, arbitrage, and risk-management frameworks — while remaining fully non-custodial and leveraging OrangeBit’s hybrid settlement architecture.
Core Characteristics
Dual Position Capability: Traders can open a long and a short position on the same underlying asset concurrently without automatic netting. Each side is tracked independently.
Strategic Hedging: Hedge Mode allows users to lock in exposure (e.g., long for directional, short for protection) or construct delta-neutral strategies (e.g., long and short of equal size), giving professional users precise risk layering.
Margin Isolation: Positions in Hedge Mode use separate margin allocations. While the account collateral is shared according to the selected margin mode (cross or isolated), each leg (long or short) maintains independent maintenance margin thresholds and liquidation rules.
Trading and Settlement Architecture: Execution is routed via OrangeBit’s off-chain matching engine for speed and liquidity; all resulting positions, margin movements and PnL are settled on-chain or via hybrid multi-sig vaults, maintaining full transparency and user control.
Capital Efficiency: Hedge Mode supports sophisticated workflows — for example, entering a long position for upside exposure and simultaneously placing a short hedge to cap downside — all while utilising margin efficiently under OrangeBit’s risk rules.
How It Works (Illustrative Workflow)
Trader selects Hedge Mode for a specific perpetual contract (e.g., BTC/USDT).
Trader opens a long position with defined size, leverage and margin mode (cross or isolated).
Trader also opens a short position on the same contract (or equivalent hedge instrument) with separate size, leverage and margin settings.
The OrangeBit system tracks each leg individually: collateral used, unrealised PnL, liquidation threshold.
At any time the trader may close one leg (e.g., the long) while holding the other leg, modify margin or adjust leverage.
Settlement, funding payments, fee calculations and on-chain balance updates occur separately for each leg; all authorisation remains non-custodial, signed by gamer’s wallet or embedded wallet.
Key Benefits
Enables risk mitigation via protection strategies: reduce exposure to adverse moves while maintaining upside potential.
Supports arbitrage and market neutral strategies: hold offsetting positions and capture spreads, funding rate differentials or volatility trade opportunities.
Maintains non-custodial control of funds: even with hedge positions, user funds remain in their wallet or smart contract vault — OrangeBit cannot move or net positions without explicit user signing.
Seamless interface experience: Hedge Mode is integrated into the same trading dashboard as Simple or Pro mode — without requiring users to switch platforms or wallets.
Important Considerations
Although dual positions allow greater flexibility, the combined leverage and margin usage must still conform to OrangeBit’s overall margin rules and risk checks (initial/maintenance margin, margin ratios, liquidation protocols).
Funding payments, fees and PnL for each leg are calculated independently — traders should understand how these may net out or interact when using hedge combinations.
Hedge Mode is best suited for experienced traders familiar with derivatives, leverage risk, margin dynamics and on-chain settlement mechanics.
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