Is there any substantive difference between hedged and netted account systems?

Is the difference between hedging and netting accounts just a difference in accounting style?

I understand how these two systems work but I don't understand why we need both of them. A thorough search gave articles only about what they are, not what's their purpose. I also read that hedging is more common than netting and that brokers charge more for orders in hedging, is that true under your experience?

More importantly, does the type of accounting system affect your bottom line in any way?

Forex | 👁 918 | Posted 2018-03-09 | Share on Facebook | Twitter | Google+

| Modified: 2018-03-09 | Author:


Rage_Boner 2 years ago

A hedging account is good for gambling since you can hedge a loss to pause trading and then close one of the offset orders to re-enter the trade without losing leverage due to the loss. It's also good for traders who use multiple bots to trade multiple concurrent strategies, which is nearly impossible to manage on a netted account. Most traders don't know that you can treat a hedge account like a netted account by reconciling offset orders as already closed using the closeby order (eg. buy to Open -> sell to Close), thus you can scale into and out of positions with pending or market orders without any extra fees/spreads on a hedge account provided you know how. The problem is that 99% of traders don't, and therefore believe that hedging costs more

g3orgeLuc4s 2 years ago

top result when I googled hedged account system I'm not sure if it's for regulatory purposes or otherwise, but many (and I believe all US facing) brokers make you use a netted account setup... OANDA is an example though you can easily get around it by setting up a sub account.

enivid 2 years ago

The systems differ in how you should control and execute trades. The bottom line is not affected.

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