mt5 netting vs hedging account mode - which to use and why it matters
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opened a new mt5 account and had to choose between netting and hedging mode. chose hedging because it sounded more flexible. but now i'm reading that some brokers don't offer both and there are execution differences. can someone explain the practical difference and which is right for different strategies?
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netting mode: you can only have one position per symbol. if you have a long and try to open a short on the same symbol, it reduces or closes the long instead of opening a new position. this is how most professional/institutional setups work and is the default for most serious brokers. hedging mode: you can hold simultaneous long and short on the same symbol as separate positions. sounds useful but mostly creates confusion and doubles your commission exposure.
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hedging mode is a retail feature that sounds appealing but is rarely actually useful. the main argument for it is 'locking in profit' by opening the opposite direction instead of closing, but you're still paying spread/commission on both positions and can just achieve the same result by closing. the only genuine use case is certain ea setups that require explicit separate position tracking.
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locked at account creation on most brokers. you need to open a new account to change modes. some brokers only offer one mode - many institutional-oriented brokers only offer netting. if you're running eas it's worth checking whether your ea was designed for netting or hedging mode specifically, some eas break in the wrong mode.
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switched from hedging to netting after about 6 months. the clarity of having one position per symbol is significantly better for understanding your actual market exposure at a glance. in hedging mode with multiple positions open you can have offsetting trades that net to almost no exposure but still show large notional values and pay double commission. netting makes your book cleaner.
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