In this article, you will become familiar with the conditions and requirements for performing Hedge (Hedge) trades on the Trendo trading platform.
Hedge trading allows traders to simultaneously open both long and short positions on the same instrument, enabling them to manage the risks arising from market fluctuations.
For example, if a trader holds a long position on the EUR/USD currency pair and is concerned about a price drop, they can open a short position on the same instrument to hedge against potential losses.
To open any hedge position (long or short), having sufficient free margin (Free Margin) is essential.
The required margin is calculated based on the trade volume and the leverage assigned to the account.
During normal market periods, no additional free margin is required to close any hedge positions.
However, note that when closing hedge trades, you must monitor your account balance and stop-out level.
If the loss on the open position exceeds the account balance and the losing trade is closed first, the account may become negative, and the profitable trade could also be closed due to reaching the stop-out level.
In certain periods, the leverage of instruments is reduced. In such cases, sufficient free margin is required to close any hedge position. This leverage reduction occurs under two circumstances:
60 to 30 minutes before the news release: Leverage for related instruments is reduced to 1:500.
30 minutes before to 3 minutes after the news release: Leverage is further reduced to 1:200.
30 minutes before market close until 12 minutes after market opening: Leverage for all instruments is reduced to 1:200.
This rule also applies during weekend trading holidays (Saturday and Sunday).
Note: This rule applies only to trades where more than 25% of the position volume is hedged. If the hedged volume is less than 25%, no additional free margin is required to close positions during reduced leverage periods.
If you require further guidance, please contact the Trendo support team.