Add OmsType docs

docs/concepts/execution.md

@@ -68,6 +68,55 @@ This diagram illustrates message flow (commands and events) across the Nautilus
 
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+## Order management system (OmsType)
+
+An order management system (OMS) type refers to the method used for tracking positions for an instrument.
+This applies to both strategies and venues (simulated and real). Even if a venue doesn't explicitly 
+state the method in use, an OMS type is always in effect. The OMS type for a component can be specified 
+using the `OmsType` enum.
+
+There are three OMS types:
+
+- `UNSPECIFIED`: The OMS type defaults based on where it is applied (details below)
+- `NETTING`: Positions are combined into a single position per instrument ID 
+- `HEDGING`: Multiple positions per instrument ID are supported (both long and short)
+
+:::note
+Configuring OMS types separately for strategies and venues increases platform complexity but allows
+for a wide range of trading styles and preferences (see the table below).
+:::
+
+The table below describes different configuration combinations and their applicable scenarios.
+When the strategy and venue OMS types differ, the `ExecutionEngine` handles this by overriding or assigning `position_id` values upon received order fill events.
+A "virtual position" refers to a position ID that exists within the Nautilus system but not on the venue in 
+reality.
+
+| Strategy OMS                 | Venue OMS              | Description                                                                                                                                                |
+|:-----------------------------|:-----------------------|:-----------------------------------------------------------------------------------------------------------------------------------------------------------|
+| `NETTING`                    | `NETTING`              | The strategy uses the venues native OMS type, with a single position ID per instrument ID.                                                                 |
+| `HEDGING`                    | `HEDGING`              | The strategy uses the venues native OMS type, with multiple position IDs per instrument ID (both `LONG` and `SHORT`).                                      |
+| `NETTING`                    | `HEDGING`              | The strategy **overrides** the venues native OMS type. The venue tracks multiple positions per instrument ID, but Nautilus maintains a single position ID. |
+| `HEDGING`                    | `NETTING`              | The strategy **overrides** the venues native OMS type. The venue tracks a single position per instrument ID, but Nautilus maintains multiple position IDs. |
+
+Examples:
+
+- Most cryptocurrency exchanges use a `NETTING` OMS type, representing a single position per market. However, it may be desirable for a trader to track multiple "virtual" positions for a strategy.
+- Some FX ECNs or brokers use a `HEDGING` OMS type, tracking multiple positions both `LONG` and `SHORT`. However, the trader may only care about the NET position per currency pair.
+
+:::info
+Nautilus does not yet support venue-side hedging modes such as Binance `BOTH` vs. `LONG/SHORT` where the venue nets per direction.
+It is advised to keep Binance account configurations as `BOTH` so that a single position is netted.
+:::
+
+### OMS configuration
+
+When configuring a backtest, it's possible to specify the oms_type for the venue.
+It is advised to match this with the actual OMS type used by the venue in reality.
+
+If a strategy OMS type is not explicitly set through the oms_type configuration option,
+it will default to `UNSPECIFIED`. This means the `ExecutionEngine` will not override any venue `position_id`s, 
+and the OMS type will follow the venue's OMS type.
+
 ## Execution algorithms
 
 The platform supports customized execution algorithm components and provides some built-in