Last updated on 23-Apr-2014

Avoid Hedging

Avoid Hedging is the default and recommended setting for ZuluTrade Broker Accounts that do not support the default ZuluTrade trading mode that is ticket-based trading.

In ticket-based trading the association between new orders and existing open positions is made using specific order tickets, as opposed to non-ticket based systems where the orders placed are associated with the instrument. Despite the difference in nature between the two modes, ZuluTrade supports the execution of any order in a way that the overall performance and PnL will be the same independent of trading mode.

With this option enabled, ZuluTrade will opt out any incoming orders that would hedge existing market positions and retain your account’s trading status in a more comprehensive and straight forward state, which is recommended for the less advanced users. If you decide to disable it, please be aware that the following cases may occur:

Case 1 - Insufficient available margin to manage your account

Each action performed in your account is an order. In non ticket-based systems, when the User tries to close an open position, ZuluTrade issues an order of equal lot size and of the opposite direction. Since orders require a margin in order to be executed by your Broker, please be very cautious to have sufficient margin in your account at all times, so that all orders (buy, sell or close) can be performed.

By selecting the Avoid Hedging option you will not need additional margin to perform orders for closing trades at ZuluTrade.

Case 2 - Conflicting strategies

ZuluTrade Traders operate in ticket-based trading. So if you allow your account to receive orders of the opposite direction for the same currency pair, please be aware that conflicting strategies may affect your account as signals from the same or different Traders may be counteracting each other.

By selecting the Avoid Hedging option the trade that will cause hedging will be avoided and it will be easier to compare your trading status between your ZuluTrade account and your Broker.

Case 3 - Different representation between your trading status at ZuluTrade and at your Broker

If you have an open trade in your account and you then receive an order of the same lot size on the opposite direction, this will be translated as a close order in your Broker account, but both trades will appear open at your ZuluTrade account. So although execution of all trading actions and realized PnL of these trades will be identical, representation will differ between your Broker and your ZuluTrade accounts.

By selecting the Avoid Hedging option the trade that will cause hedging will be avoided and it will be easier to compare your trading status between your ZuluTrade account and your Broker.