When trading futures on LMEX, one of the first configuration decisions you make is your position mode: One-Way or Hedge. Both allow you to trade the same contract, but they govern how positions interact with each other — and the difference matters for strategy execution, margin requirements, and risk management.
One-Way Mode
In One-Way Mode, you can only hold a single direction per market at any one time — either long or short. If you hold a long position and place a sell order, it reduces or closes your long rather than opening a separate short.
This is the simpler of the two modes. It suits traders with a clear directional view and makes position management straightforward — you know at a glance exactly what you hold and in which direction.
Hedge Mode
Hedge Mode allows you to hold both long and short positions in the same market simultaneously. The two positions are treated independently — a long does not cancel a short when both are open.
This has several practical use cases:
Locking in unrealised PnL without closing: If you hold a profitable long position but expect a short-term correction, you can open a short in Hedge Mode to lock in your paper profit without triggering a full close. When the short-term move resolves, you close the short and your long remains intact.
Running concurrent directional strategies: Algorithmic traders sometimes operate both a bullish and a bearish strategy on the same contract simultaneously — for instance, a mean-reversion long alongside a trend-following short. Hedge Mode allows these to coexist without the positions netting against each other.
Separating bot and manual positions: When using SmartTrade alongside manual futures trading, Hedge Mode allows the bot’s positions and your discretionary positions to run in the same market without interfering.
Liquidation in Hedge Mode
The liquidation mechanics in Hedge Mode require careful attention.
Even in a perfectly hedged situation — equal long and short notional — collateral is still required. The hedge does not eliminate margin requirements.
When both legs of a hedged position face liquidation, the system prioritises closing the fully hedged portion first. If margin remains insufficient after all hedged positions are closed, the liquidation engine continues to the remaining open positions.
The liquidation price is the same for both the long and short in Hedge Mode. If the mark price reaches that level, both positions are at risk.
Position Margin in Hedge Mode
A key subtlety: margin requirements differ between fully hedged and non-fully hedged positions, even at identical position sizes.
Consider a 100-contract long and a 100-contract short — fully hedged. If you then add another 50-contract long without adding a corresponding short, you now have a partially hedged position. The margin requirements for those 50 unhedged contracts are higher than for the hedged 100.
Opening or closing a partial position can silently change your hedge status — and therefore your margin requirement — without a direct prompt. Monitor your hedge ratio carefully, particularly when entering or exiting around strategy positions.
How to Switch Position Mode
- Navigate to the Futures trading interface on LMEX.
- Find the Position Mode selector in the settings or order panel.
- Select your desired mode and confirm.
Important: You cannot switch position mode while you have any open positions or active orders in that market. All positions must be closed and all orders cancelled first.
Position mode settings are market-specific. You can operate in One-Way Mode for BTC-PERP while simultaneously using Hedge Mode for ETH-PERP.
Which Should You Use?
For most traders approaching futures with a single directional view, One-Way Mode is sufficient and simpler to track. Hedge Mode adds value when you are running concurrent algorithmic strategies with independent logic, locking in unrealised profits without triggering a close, or separating SmartTrade bot positions from manual trades in the same market.
The discipline required in Hedge Mode is awareness of your partial hedge status at all times — particularly the margin implications of unequal positions on each side.
Frequently Asked Questions
Can I switch modes with an open position? No. All positions must be closed and all orders cancelled in the relevant market before switching is permitted.
Does hedging eliminate liquidation risk? No. Both legs require collateral. Even a perfectly balanced hedge can be liquidated if your total margin balance falls below the required maintenance level.
Are position modes independent per market? Yes. Your mode for BTC-PERP is entirely independent of your mode for ETH-PERP or any other contract.
Do funding fees apply to both legs of a hedged position? Yes — each leg is charged independently. In a perfectly balanced hedge, you pay funding on one side and receive it on the other. Due to timing and rate differences, these do not necessarily net to zero.
