# What is Hedging mode?

All positions on NEXDEX are opened in hedging mode by default, long and short positions can be opened simultaneously within one contract.

## Advantages of trading in hedging mode:

1. **Risk Management.**

   Hedging allows traders to manage the risks associated with the volatile cryptocurrency market by setting opposite positions. This can help protect capital from significant losses during market uncertainties.
2. **Portfolio Improvement.**

   Traders can use hedging to balance their portfolio, creating stability and reducing overall risk.
3. **Diverse Trading Strategies.**

   Hedging mode can broaden the range of available trading strategies. For instance, traders can hold both long and short positions on the same asset or related assets at the same time.
4. **Arbitrage.**

   Hedging can be used for arbitrage strategies, where traders can benefit from price differences between different exchanges or financial instruments.
5. **Protection Against Adverse Price Movements.**

   When used correctly, hedging can offer protection against adverse price movements while retaining the potential for profit.
6. **Enhanced Capital Management.**

   Hedging mode can help traders manage their capital more effectively, providing more flexibility in responding to changing market conditions.

{% hint style="info" %}
**In simple terms.**

In One-Way Mode, if you open a short position while having an open long position, your long position will be reduced or closed. Similarly, opening a long position while having an open short position will lead to the reduction or closing of your short position.

In Hedging Mode, opening a short position while having an open long position (or vice versa) won't affect the existing position. Instead, a new position will be opened alongside, allowing you to have both long and short positions on the same asset simultaneously.
{% endhint %}


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