Hedged margin in gold trading

Hedged margin is the margin applied to opposite positions on the same symbol held at the same time in a hedging-mode account, for example 1 lot long and 1 lot short XAUUSD. Because the two positions cancel each other’s price risk, many platforms charge only a fraction of the normal margin on the matched part, and some charge none.

How it applies to gold trading

The setting appears in the contract specification as hedged margin or margin hedged, often as a contract size such as 50 instead of 100. A locked position frees margin, which can look like it solves a margin problem. It does not remove the loss already on the books, and it does not stop costs: both legs pay spread on entry and exit and usually both pay swap each night.

A further risk is the rollover and news periods, when spreads widen. Unwinding a lock means closing one leg first, which reopens full price exposure.

Worked example

Example (hypothetical numbers): at 4,000 with 1:100 leverage, 1 lot needs $4,000 margin. Adding a 1 lot short with a 50% hedged margin brings total margin for the pair to $2,000 rather than $8,000. Equity, however, is frozen at its current loss, and two swaps of about -$6 each cost $12 per night.

A common mistake

Locking a losing trade to “avoid” a stop-out. The loss is unchanged, costs keep running and deciding which leg to close later is usually harder than taking the stop.

See also: Hedging mode, Hedging, Margin, Swap and rollover.

Frequently asked questions