Key Features
  • Keep buy and sell positions open (within the same currency pair & at the same time)
  • Market entry without having to choose a direction for the currency trading pair
  • Open two positions with the margin requirement for only one

Hedging is a foremost attribute of FXCM’s No Dealing Desk model. Hedging is made possible across all demo and live accounts (except for JPY-denominated accounts).

Setting Up a Hedged Trade

Hypothetical example of hedging a position:

Just buy or sell a trading pair, after that do the opposite. For example: buy 1 lot of EUR/USD:

Buy Order

Afterward, sell 1 lot of EUR/USD:

Sell Order

At this time, you have a hedged trade in EUR/USD. You can check in the "S/B" column the position that you bought and the position that you sold. If the EUR/USD goes up, you have a profit in the buy position and a loss in the sell position. If it falls, the exact opposite applies.

Hedging Accounts

You can check the required margin in the "Usd Mr" column in the "Accounts" pane. You are holding 2 lots of EUR/USD, but since this is an evenly hedged trade, you don't need to dedicate any used margin, that way you will see an increase in the usable margin.

Margin Requirement to Maintain a Hedged Position

FXCM does not require margin on hedged positions. This means that you will see an increase in your usable margin when you enter a hedge. Please note that while additional margin will temporarily be made available, you will ultimately be required to put up the original margin when you close out one side of your hedge. It is important to verify that you have enough usable margin available before you close out of a hedge. In rare cases, the additional margin requirement could trigger a margin call on your account.

Closing a Hedged Trade

All you have to do is use a close, stop, or limit order as you would do with any other trade. Every buy and sell position needs to be closed separately.

When Should One Use Hedging?

Watch this video to learn more about how to use hedging to trade in a range-bound market.

Can Hedging Be Turned Off?

Yes, hedging is not an obligatory feature on live accounts. It’s an optional feature which can be disabled on your FXCM live account. To do so, please contact us.
Click here for our contact information.

Though the ability to hedge is an enticing feature, traders should nonetheless be alerted to the different factors that may affect their accounts. Spreads can widen, making margin lessen, which can eventually lead to the danger of a margin call. Pip costs and rollover can potentially cause a decline in account equity, negatively effecting hedged positions. For additional information on hedging strategies in relation to the FXCM No Dealing Desk platform, you can communicate with one of our sales representatives.