Hedging is a strategy where you place a buy position and a sell position on the same instrument at the same time. You do this to limit your potential loss or to lock in profits, regardless of which way the market moves next.
Margin Requirements for Hedging
When you hedge, you greatly reduce your market risk. This means the margin, the money held to secure your trade, is calculated differently than for a single open position.
1. A Fully Hedged Order means the buy and sell volume are exactly the same (e.g., 1 lot buy and 1 lot sell).
| Scenario | Example | Margin Required | Why It Matters |
| Fully Hedged | Buy 2 lots XAU/USD and Sell 2 lots XAU/USD | Normally No Margin | Since the positions completely offset each other, you typically keep your capital free. |
| Exception | Rare occasions during high market volatility. | Margin may be applied to one side. | This protects your account by ensuring you have enough coverage if the market makes extreme moves. |
2. A Partially Hedged Order means the buy and sell volumes are different (e.g., 2 lots buy and 1 lot sell).
| Scenario | Example | Margin Required | Why It Matters |
| Partially Hedged | Buy 2 lots XAU/USD and Sell 1 lot XAU/USD | Margin is always required for the unmatched 1 lot. | You are only charged margin for the portion of the trade that is still exposed to market movement. |
IMPORTANT:
Hedging is allowed on all Tradin accounts, along with other flexible strategies like scalping and the use of Expert Advisors (EAs). However, even hedged positions are subject to automatic closure to protect your account.
Stop-Out on Hedged Positions
Your hedged positions can be automatically closed (Stopped-Out) if either of these critical safety limits is reached:
- Negative Equity: If your total account value (Equity) drops below zero.
- Low Margin Level: If your Margin Level falls to or below your account's Stop-Out threshold (e.g., 30% for Standard accounts).
Why Can't I Close a Hedged Order?
If you try to close one side of a fully hedged trade, the remaining position instantly becomes unhedged (unprotected) and requires margin.
- The Problem: If your Free Margin is low, the platform will block the closure. This happens because your account does not have enough available capital to cover the margin needed for the position that would remain open.
- The Solution: You must either deposit more funds or wait for the market to move in your favor, increasing your Free Margin.
When You Close Part of a Trade
If you close one half of a fully hedged position, the other half instantly becomes exposed, and margin will immediately be required for the remaining volume.
Example:
- You start with a Fully Hedged position (Buy 2 lots and Sell 2 lots).
- You close the 2 lots buy order.
- The remaining 2 lots sell order is now unhedged. Margin will be instantly applied to cover the full volume of that remaining 2 lots.
