Hedging vs Netting Account
Also known as: hedging mode, netting mode
What is it?
Hedging and netting are two different ways a trading account keeps track of your positions on the same instrument, and the difference matters a lot for automation. A position is simply an open trade. On a hedging account, you can hold several trades on the same instrument at once, even in opposite directions, and the platform keeps each one separate. So you could have a buy and a sell on EUR/USD open side by side as two distinct trades.
On a netting account, the platform instead combines everything you hold on a single instrument into one net position. If you are holding a buy and then open a sell of equal size, they offset and you end up flat, rather than holding two trades. A simple way to picture it: hedging is like keeping each receipt in its own envelope, while netting tallies everything onto one running total. Why does a beginner need to care?
Because some automated strategies are built to layer multiple trades on the same instrument, for example grid or hedging robots that intentionally hold opposing positions. Run that kind of strategy on a netting account and its layered orders collapse into a single net position, which can completely change, or break, how it behaves. MT4 accounts are hedging-based, while MT5 can be either depending on your broker, so the essential habit is to confirm which model your account uses before deploying any strategy that holds more than one position per instrument.
Why it matters: Automation behaves differently under each - a strategy that opens layered trades works on hedging but gets netted into one position otherwise.
The account model changes how multiple orders on one symbol combine, which can break strategy logic.
Real-world example
On a netting MT5 account, opening a buy then a sell on EUR/USD cancels to flat, not two open trades as on hedging.
How SignalBots handles it
SignalBots' connector accounts for hedging versus netting so signalled trades behave as the strategy intends on your account type.
Pro tip
Confirm your account model before deploying any multi-position strategy; the same EA can behave completely differently.
Common pitfalls
Running a grid or hedging EA on a netting account, where its layered orders collapse into one net position.
Frequently asked questions
How do I know which account model I have?
MT4 accounts are hedging-based. MT5 can be either hedging or netting depending on the broker, so check your account settings before running any strategy that holds multiple positions per instrument.
What is the practical difference between the two?
Hedging keeps each trade on an instrument separate, even opposite ones. Netting merges them into a single net position, so a buy and an equal sell offset to flat instead of staying open.
Why does this matter for trading robots?
Some robots deliberately layer or hedge positions. On a netting account those layered orders collapse into one position, which can break the strategy, so the model must match the robot's design.
Is one model better than the other?
Neither is universally better. Hedging suits strategies that hold multiple positions, while netting is simpler and common for instruments like stocks. The right choice depends on what you trade and how.
Does SignalBots handle both account models?
Yes. The SignalBots connector accounts for whether your account is hedging or netting, so signalled trades behave as the strategy intends rather than misbehaving on the wrong model.