Position mode is a derivatives setting that controls how long and short exposure in the same contract is recorded and how orders affect it. Common choices are one-way mode and hedge mode.
Netting or separate directions
In one-way mode, an opposite-side trade reduces the existing position before any excess quantity opens exposure in the reverse direction. In hedge mode, an instruction can instead open a separate opposite position, while closing requires identifying the side being reduced.
For example, a long of three units followed by a one-unit sell leaves a two-unit long under netting. If the sell explicitly opens a short under hedge mode, the account instead holds a three-unit long and a one-unit short. These are different position records even though matching linear contracts have the same two-unit net directional exposure.
Separate it from margin mode
Position mode does not decide by itself whether collateral is isolated or shared. Margin requirements, leverage settings and liquidation treatment depend on the margin arrangement and product rules as well.
Platforms may restrict switching while positions or orders remain open, and support can vary by contract. Confirming the active mode and an order’s open, close or reduce-only intent helps avoid unintentionally adding or reversing exposure.