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August 13, 2020

Question:Does FXCM allow Hedging of positions on Trading Station platform?

FXCM - What's now?

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Answer:

Hedging positions on FXCM Trading Station

The hedging feature is currently available on all accounts using FXCM’s No Dealing Desk service.

If you are interested in taking advantage of this new feature.

Hedging a position is as simple as creating an opposing order of the same amount.

You can hedge a current position with a Market or Entry order.

Placing an order in the opposite direction of your existing position will establish a second ticket.

The cost to hedge is only the additional bid/ask spread.

The margin requirement on the initial trade will be the standard required margin for trades on your account.

For hedged positions, once the second leg of the trade is added, the margin requirement will be divided among the two positions.

You can practice with the hedging feature by registering for our No Dealing Desk demo account.

Go to FXCM Official Website

When should you use the hedging feature?

The most effective way to trade a market in which you are not sure if it will continue in the same direction or reverse is to find concrete support and resistance levels.

Trading in such a price environment involves isolating currencies that are trading sideways in ranges (or channels), and then selling at the top and buying at the bottom of the channel.

This allows you to pinpoint levels where significant price action will take place.

Currencies that tend to trade sideways are often currencies with low interest rate differentials such the EUR/CHF and the EUR/GBP.

Hedged positions do not necessarily limit risk as traders can find themselves losing on both sides of the trade.

Hedging a position temporarily locks in the floating profit or loss on an existing position.

While this strategy tends to work temporarily in range markets, it does not work well in trending markets.

FXCM advises that you place stop-loss orders on your positions to properly mitigate risk.

A position can still be closed with a stop-loss order, a limit order, or by left-clicking on the close price in the Open Positions window.

You can also close a trade by left-clicking on the ticket number that you would like to close, then clicking the close button at the top of the trading station.

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