BUYING and SELLING a market at the same time? - Hedging Explained

Hedging is a way to lower risk by trading a market in both directions. When traders decide to hedge, they're insuring themselves against a negative event's impact on their finances and trading activities. This doesn't prevent all negative events from happening. However, if a negative event does happen and you're properly hedged, the impact of the event is reduced.

The TN Trader platform operates on a one-cancels-the-other basis. This means that if you've an open SELL position and then later on open a BUY position or your BUY order has triggered, the BUY will cancel out the SELL. If you wish to have both a BUY and a SELL position open together, you need to press the 'Hedging' button.

Note that the hedge only begins when the SELL and BUY orders are open on the same instrument at the same time. In whichever direction the trade goes, with a hedge you limit the losses incurred as one trade will still generate a profit.

Hedging via the desktop

As mentioned above, by default, a client's trades are not hedged. If you have a trade open and then open a new position in the opposing direction, the initial position will be closed. 

For example; you have a 1 stake BUY trade open on Wall Street 30 and then open a 1 stake SELL trade on the same market; the original BUY trade will be closed out. If you don't want any positions in opposing directions in the same market to close automatically, you must manually opt to enable hedging before you're able to hedge a trade.

So looking at how to do this via the deal ticket on a desktop:

1. Click the 'Trade' button on the market screen to open a new ticket
2. Input your stake
3. Click 'SELL' or 'BUY' 
4. Check the 'Hedging' checkbox;
5. Click 'Submit'

The same can be applied to 'orders'. To do this for a pending order, you must do the above but instead of doing this on the Trade ticket, you must do it on an Order ticket.

It's easy to forget to hedge our positions when we rush to place so to save the hassle of continuously clicking the hedge button on every trade or order, there is the option to have hedging enabled all the time...

1. Click the cog icon to open the ticket option screen
2. Click the 'Always Hedge' button
3. Click the 'SAVE' button to save the settings

Again this can be done for both trades and orders. To do this for a pending order, you must do the above but instead of doing this on the Trade ticket, you must do it on an Order ticket.

Hedging via the mobile app

If you want to hedge a position via the mobile app, you will need to click on the market you wish to trade on, input your stake size and then toggle the 'Hedging' button and click 'Place Trade':

The option to always have your positions hedged is also available on the mobile app. To enable this, visit the cog on the top left-hand corner of the instrument selected and a pop-up window will appear. On the pop-up window, toggle the 'Always Hedge' button and then press 'Save'.

The same will apply for pending orders, however, you will need to toggle the 'Place As Order' button and insert the price you wish to enter the market at:

If you require any further information on the above, please contact us at support.sc@tradenation.com.