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Auto-Hedging: Godmode HFT Grid

The Auto-Hedge feature transforms the Vortex DCA strategy into a “godmode” high-frequency trading grid by replacing the liquidation safeguard with intelligent auto-hedging. Instead of stopping grid placement when approaching liquidation, it automatically hedges positions to protect against liquidation while keeping the grid active.

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🎯 What is Auto-Hedging?

Auto-hedging is an advanced risk management system that:
  • Monitors your NET position continuously (long qty - short qty)
  • Triggers automatic hedge orders when drawdown or liquidation thresholds are hit
  • Places opposite-side market orders to protect your position
  • Keeps your grid trading active during volatile moves
  • Recovers with trailing profit targets on hedge positions
Auto-hedging works on BloFin, Bybit, and other exchanges that support hedge mode (simultaneous long/short positions).

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🔄 Traditional vs Auto-Hedge

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Traditional Liquidation Safeguard

Price drops -> Approaching liquidation -> STOP grid orders
❌ No new positions
❌ Exposure remains
❌ Manual intervention required
❌ Grid disabled until recovery

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Auto-Hedge Approach

Price drops -> Approaching liquidation -> HEDGE position automatically
✅ Grid continues operating
✅ Risk neutralized
✅ Automatic recovery
✅ Profit from hedge closure

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⚡ Key Benefits

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1. Uninterrupted Grid Operation

Your grid keeps placing orders even during extreme volatility, maximizing profit potential.

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2. Active Risk Protection

Instead of passive monitoring, auto-hedge actively protects your position by opening opposite trades.

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3. Automatic Recovery

Hedge positions close automatically with small profits (0.2% default) as price recovers.

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4. Anti-Cascade Protection

Advanced safety mechanisms prevent repeated hedging of the same drawdown event.

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5. Trailing Stop Profit Lock

Hedge positions use trailing stops to lock in profits during favorable moves.

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📊 How It Works (Simple Version)

Step 1: Monitor NET Position 
Long: 10,000 DOGE @ $0.17000
Short: 0 DOGE
NET: 10,000 LONG
Step 2: Trigger Detection 
Price drops to $0.16320
Drawdown: 4.0% <- TRIGGER!
Step 3: Hedge Placement 
Place MARKET SELL 5,000 DOGE (50% hedge)
Result: Long 10,000 | Short 5,000 | NET 5,000 LONG
Grid continues placing orders!
Step 4: Hedge Take Profit 
Hedge filled @ $0.16320
TP placed @ $0.16287 (0.2% profit)
Step 5: Recovery 
Price recovers to $0.16287
Hedge closes with $16.50 profit
Position returns to: Long 10,000 | Short 0

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🎛️ Quick Configuration

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Minimum Required Settings

{
  "vortex_dca": {
    "vortex_autohedge_enabled": true,
    "vortex_autohedge_ratio": 0.5,
    "vortex_autohedge_on_drawdown_pct": 0.04,
    "vortex_autohedge_on_liquidation_distance_pct": 0.10
  }
}
What this does:
  • Enables auto-hedge (replaces liquidation safeguard)
  • Hedges 50% of position when triggered
  • Triggers at 4% drawdown OR when liquidation is within 10%
Start with these conservative defaults and adjust based on your risk tolerance!

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🔥 Use Cases

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High-Frequency Grid Trading

Perfect for aggressive HFT grids with high wallet exposure (greater than 50%) on volatile assets. 
{
  "wallet_exposure": 0.8,
  "vortex_autohedge_ratio": 0.5,
  "vortex_autohedge_on_drawdown_pct": 0.05
}

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Volatile Market Protection

Protect positions during high volatility while maintaining grid operation. 
{
  "vortex_autohedge_ratio": 0.7,
  "vortex_autohedge_on_drawdown_pct": 0.03,
  "vortex_autohedge_on_liquidation_distance_pct": 0.15
}

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Maximum Grid Uptime (Godmode)

Ultimate configuration for maximum grid operation with minimal downtime. 
{
  "wallet_exposure": 1.0,
  "vortex_autohedge_ratio": 0.5,
  "vortex_autohedge_on_drawdown_pct": 0.08,
  "vortex_autohedge_on_liquidation_distance_pct": 0.05
}

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⚠️ Important Notes

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Auto-Hedge Replaces Liquidation Safeguard

When vortex_autohedge_enabled: true, the liquidation safeguard is automatically disabled. You’re choosing active risk management over passive monitoring.
Auto-hedging requires sufficient margin to place hedge orders. Ensure you have adequate balance!

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Exchange Requirements

  • Hedge Mode: Must be enabled on the exchange
  • Cross Margin: Recommended for better capital efficiency
  • Leverage: 5x-20x recommended for beginners, up to 50x for advanced users

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Not Suitable For

  • ❌ Spot trading (no short positions available)
  • ❌ Very low volatility assets (hedge triggers may be too frequent)
  • ❌ Extremely small accounts (less than $500)

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🚀 Getting Started

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1. Enable Hedge Mode on Exchange

BloFin:
  1. Go to Trading Settings
  2. Select “Hedge Mode” (allows simultaneous long/short)
  3. Set margin mode to “Cross”
Bybit:
  1. Go to Derivatives -> USDT Perpetual
  2. Position Mode -> Hedge Mode
  3. Margin Mode -> Cross Margin

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2. Configure Auto-Hedge

Add to your bot configuration: 
{
  "exchange": "blofin",
  "strategy": "vortex_dca",
  "vortex_dca": {
    "vortex_autohedge_enabled": true,
    "vortex_autohedge_ratio": 0.5,
    "vortex_autohedge_on_drawdown_pct": 0.04,
    "vortex_autohedge_on_liquidation_distance_pct": 0.10,
    "vortex_autohedge_tp_target": 0.002,
    "vortex_autohedge_trailing_stop_enabled": true,
    "vortex_autohedge_trailing_distance_pct": 0.002
  }
}

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3. Start with Small Exposure

Begin with 10-20% wallet exposure to test the system: 
{
  "wallet_exposure": 0.15,
  "symbols": ["DOGEUSDT"]
}

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4. Monitor Logs

Watch for auto-hedge trigger messages: 
[DOGEUSDT] LONG 🛡️ AUTO-HEDGE TRIGGER: DRAWDOWN
   Position: 12000.0000 @ $0.16800
   Current: $0.16128 | Drawdown: 4.00%

[DOGEUSDT] LONG 🛡️ PLACING HEDGE: sell 6000.0000 @ $0.16118
[DOGEUSDT] LONG ✅ HEDGE PLACED: Order #1234567890

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📈 Performance Expectations

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Typical Results

Without Auto-Hedge:
  • Grid stops during volatile moves
  • Requires manual monitoring
  • Potential liquidation risk
  • Limited profit during recovery
With Auto-Hedge:
  • Grid operates 24/7 during volatility
  • Automatic risk management
  • Protected from liquidation
  • Extra profit from hedge closures

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Example Session

Scenario: DOGE volatile move from 0.17000−>0.17000 -> 0.16000 -> $0.17500 
Grid fills:       $450 profit
Hedge closures:   $85 profit
Total:            $535 profit

Without auto-hedge:
Grid profit:      $180 (stopped early)
Manual stress:    High

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🔗 Learn More

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❓ FAQ

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Does auto-hedge work on all exchanges?

Auto-hedging works on exchanges that support hedge mode (simultaneous long/short positions). Currently supported: BloFin, Bybit.

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Will I get liquidated with auto-hedge enabled?

Auto-hedging significantly reduces liquidation risk by automatically hedging your position. However, extreme price moves can still trigger liquidation if hedges can’t be placed fast enough.

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How much margin do I need?

Ensure you have at least 30% of your position size available as margin for hedge orders. For aggressive setups, 50%+ is recommended.

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Can I use auto-hedge with virtual chunking?

Yes! Auto-hedge and virtual chunking work together. Auto-hedge protects from liquidation, while chunking helps recover from underwater positions.

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What happens to hedge orders when bot stops?

Hedge positions remain open on the exchange. You’ll need to manually close them or restart the bot to resume management.
Ready to enable godmode trading? Start with conservative settings and gradually increase exposure! 🚀