Hedging mode in gold trading

Hedging mode is the position-accounting system, used by MT4 and available on MT5, in which every order opens its own position. You can hold three separate XAUUSD buys at different prices, or a buy and a sell at the same time, and each has its own stop-loss, take-profit and ticket number.

How it applies to gold trading

Hedging mode makes it easy to scale in and manage each entry separately, and to hold a long and a short together. The second use rarely helps: a long and a short of equal size cancel each other’s price movement but both pay spread and swap. It is mainly a way of postponing a decision.

The mode is fixed per account, set when the account is opened. Strategies and expert advisors written for hedging mode may behave differently in a netting account, where a sell reduces an existing buy instead of opening a new position.

Worked example

Example (hypothetical numbers): in hedging mode you buy 0.10 lots at 4,000 and another 0.10 at 3,995. The platform shows two positions with separate stops. If you then sell 0.10, a third position (a short) appears. In netting mode, the same sell would reduce your single 0.20 lot long to 0.10.

A common mistake

Opening an opposite position to “hedge” a loser instead of closing it. The account now carries double costs and the loss is unchanged.

See also: Netting mode, Hedged margin, Hedging, Partial close.

Frequently asked questions