The Broker Rule That Silently Kills a Hedging Strategy
ZayanFX posted:Not every broker allows hedging — holding both a buy and sell position on the same pair simultaneously — and traders relying on hedging as part of their risk management sometimes find out the hard way, mid-strategy, that their broker's entity doesn't permit it (common with US-regulated NFA brokers due to the FIFO rule).
Even among brokers that technically allow hedging, some apply it inconsistently across account types, or net positions automatically in ways that quietly cancel out a hedge the trader intended to keep separate.
Before building any strategy around hedging, it's worth confirming directly: does this specific account type explicitly support simultaneous buy/sell positions on the same instrument, and is netting policy stated clearly anywhere? A strategy that assumes hedging is available, only to find out it isn't, can unravel fast in a live account.
I’d start with the account’s hedging and netting policy. That is the part that can change how a strategy behaves in practice.
When reviewing platforms, including MountainFinco, it is worth checking whether the terms explain simultaneous positions, margin treatment, and any jurisdiction-specific limits.
A clear written policy is more useful than discovering a limitation after a live trade is already open.
On MT5 this should be checked from the account mode before live use. A hedging account keeps separate buy and sell positions, while netting reduces them into one net position. I would also test margin with two opposite demo positions, because brokers can calculate hedged margin differently. The EA should detect account mode at startup and refuse to trade if it requires hedging.
