What is Binance's one-way/two-way position? What is the difference between one-way holdings? How to set it up?

Table of contents

• What is one-way holding?
• What is a two-way position?
• Operation example: One-way vs Two-way
• Situational assumptions
• One-way position
• Two-way position
• One-way position vs Two-way position: Difference consolidation
• Under what circumstances should we use which position model?
• Things to note when switching Binance's two-way holdings
• Advantages and risks of two-way holdings
• 1. Advantages
• 2. Risk
• Conclusion

When most people open a contract on Binance, under the preset situation, the system gives you a " one-way position ". This is also the most commonly used and intuitive way for everyone to use. If you just look bullish, you go long and short when you look bearish. The direction is relatively simple.

But in addition to one-way holdings, Binance also provides another position model called " two-way holdings ". This gameplay allows you to hold long and short positions at the same time, which is often in situations where hedging, arbitrage, or locking in profits.

In this article, I will take you to understand the difference between one-way and two-way positions, use examples to illustrate the differences in operations, and share in what situations to choose which model.

What is one-way holding?

" One-way holding " is a preset mode of Binance contract and is also the most familiar gameplay method for most people.

Its rules are very simple: the same contract currency can only have positions in one direction .

For example:

If you first place a long order in BTC and then place a short order , the system will not allow you to retain two parts at the same time, but will directly offset or reduce your original long position.

The advantage of this is that the operation is simple, and novices don’t have to worry about having long orders and short orders at the same time. It is relatively simple to control risks.

As long as you judge whether the rise or fall, the position direction will be consistent.

? Suitable for ethnic groups:

• Newbie who just started to get involved in contracts
• Just want to do unilateral operations (if you are bullish, you are long, if you are bearish, you are short)
• People who are used to controlling parts in the most direct way

What is a two-way position?

As the name suggests, " two-way position " means that it allows you to hold long and short positions in the same currency at the same time .

Unlike one-way, these two parts do not cancel each other out, but exist independently.

For example:

• You first open a BTC long position (bullish).
• Then another BTC short order was placed (bearish).

In two-way mode, your account will retain both parts and the system will not merge or offset them.

This design is especially suitable for situations where hedging, arbitrage, or locking in profits .

For example, if you already have a long order in your hand to make money, but you are worried that the market will fall in the short term, you can open another short order to hedge the risk without having to close the original long order.

? Suitable for ethnic groups:

• Advanced operators who want to do arbitrage or lock positions
• People who want to use long and short parts to layout at the same time
• People who want to keep the original parts and operate on the other side's market in a short period of time

Operation example: One-way vs Two-way

Just looking at the definition may be a bit abstract. Let’s use a simple example to illustrate the difference between the two positions.

Situational assumptions

Assuming that BTC is now priced at 100,000 USDT , you have two ideas about the market at the same time:

• It is still bullish in the medium and long term and wants to keep a long order.
• But there may be a risk of a decline in the short term, so I also want to defend it.

Let's look at the difference between one-way and two-way modes:

One-way position

• You first place a long order (1 BTC long, the opening price is 100,000) .
• Then you place a short order (short 1 BTC, opening price of 100,000) .

Result: The system will offset the position, which will eventually mean that there is no position (or only the net position with the long and short difference left).

? In one-way mode, you cannot keep long and short positions at the same time, you can only have net positions.

Two-way position

• You first place a long order (1 BTC long, the opening price is 100,000) , and you plan to hold it in the medium and long term.
• Then you put in another short order (short 1 BTC, opening price of 100,000) to defend short-term trends.

Result: The system will retain these two parts at the same time.

If BTC rises to 105,000 USDT

• Long order: earn USDT
• Short order: Loss of 5,000 USDT

Compensation on the books → Net profit and loss = 0

But at this time you can choose to "close short orders", retain long orders, and continue to take profits from medium and long term rises.

If BTC drops to 95,000 USDT

• Long order: Loss of 5,000 USDT
• Short orders: earn USDT

Compensation on the books → Net profit and loss = 0

At this time, short positions are equivalent to "blocking the knife" for long positions, helping you temporarily lock in the loss. If you think the decline is almost done, you can close the short position first and wait for the long position to rebound before recovering.

One-way position → like a straight line, the part can only move in one direction.

Two-way position → For example, there are two weapons, "attack" and "defense", which can be adjusted flexibly and retain more strategic options.

One-way position vs Two-way position: Difference consolidation

Under what circumstances should we use which position model?

There is actually no absolute one to be better in one direction or two direction. The key is how you want to use it.

Suitable for one-way holding

• You are a newbie who is just starting to get involved in contracts, mainly just bullish or bearish.
• I am used to operating only in one direction and do not want to manage multiple positions.
• I hope the operation is intuitive and simple to avoid confusing long and short parts.

? Suggestion: Beginners first use the one-way mode , focusing on familiarizing themselves with orders, stop-profit and stop-loss, and leverage control, so that risks are easier to grasp.

Suitable for holding positions in two directions

• You already have some trading experience and know how to manage long and short positions on both sides.
• Want to do risk aversion : For example, if you have spot or medium- and long positions in your hands, you want to open short positions to defend in the short term.
• If you want to do arbitrage : such as capital rate arbitrage and futures and spot spread arbitrage, you need to hold long and short positions at the same time.
• Want to lock in profits : the position has made money, but is worried about the short-term pullback of the market, use the reverse order to lock the profit first.

? Suggestion: Advanced operators or people with specific strategic needs, switch to two-way mode.

Binance sets a two-way position mode for new users by default. If yours is not a two-way position, the settings steps are as follows:

Open the Binance APP ( official download and official registration ) and enter the "Contract Trading" page.

In the upper right corner of the contract trading page, click the "Settings" icon to enter the preferences.

Remember to open the contract account first if you haven't opened it

Find "Position Mode" on the settings page and enable two-way positions.

Things to note when switching Binance's two-way holdings

• Before switching, the current position must be closed and the pending order must be cancelled , otherwise the system will not allow changes.
• The position mode can be set separately in the U-primary contract and the currency-primary contract , and the two have no effect on each other.
• After switching, all trading pairs under this type of contract will be applied , and are not independently adjusted by a single currency.
• Be sure to confirm the current mode before opening a position to avoid inconsistent position direction and expectations.

Advantages and risks of two-way holdings

1. Advantages

Market Two-way Profit: Through two-way positions, you can go long when the market rises and short when the market falls, increasing trading flexibility.

Hedging risks: If you do not have a clear judgment on the market trend, you can hedge through two-way positions to reduce the risks brought about by unilateral market fluctuations.

Make profits by taking advantage of volatility: Even if the market does not have a clear trend, volatility itself can bring profit opportunities.

2. Risk

High handling fee: Two-way holding positions require the payment of transaction fees on both sides at the same time, so the total handling fee will be higher than the one-sided holding positions.

Risk management is becoming more difficult: Two-way holdings increase the complexity of position management. Without a reasonable stop loss strategy, it may cause large losses when the market fluctuates significantly.

Conclusion

Whether it is one-way or two-way holding, they are actually just tools, and no one is definitely better. The key is your judgment of the market and what strategy you want to use to operate.

If you are just starting to get involved in contracts, the one-way mode is enough, it is simple and intuitive, and it is not easy to make mistakes. When you are familiar with trading and know how to do risk aversion or arbitrage, then switch to the two-way mode, which will be more flexible.

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