what is netting in forex?

@lawanf - 11 months ago - Forex Tools & Resources

I am trying to open a trading account with FxPro and their standard account is saying i should select either "netting" or "hedging" execution methods. So please what is the meaning of netting and how does it work?

@khumalo_thembisa - 11 months ago

Netting is an execution method where if you open several trades for the same instrument, they will not be displayed individually instead they will be summed up and displayed as one trade.

Netting is easier to understand for new traders and it keeps the trade panel decluttered and tidy.

Hedging on the other hand will display the trades individually and hedging also allows you to open a buy and sell order for the same instrument so that the profit from one, offsets the loss from the other.

@headies25284 - 1 week ago

Netting in forex is a system where you can only have ONE position per currency pair at a time.

If you open a new trade in the same pair, it combines (nets) with your existing trade instead of opening a separate one.

Example

You buy EUR/USD with:

0.10 lot

Then later you buy again:

0.20 lot

With netting:

These merge into one buy position of 0.30 lots.

If you sell EUR/USD with 0.10 lots:

It reduces your position instead of opening a new one.