What Is Hedging?
Hedging is an attempt to mitigate the risk of an investment by investing in an opposing one. In this way it can be thought of as a type of insurance. When you “hedge positions”, you’re attempting to go both long and short for the same margin trade.
It’s important to note that we do not allow hedging on Kraken. You cannot have both long and short positions open at the same time in a single currency pair. All long positions must be closed before a short position can be opened (and vice versa). However, you can have multiple long positions or multiple short positions.
It is, however, possible to hold positions in different directions for different pairs. For example, you could be long XBT/USD while simultaneously being short XBT/EUR.