Netting currencies: retail v. institutional

Discussion in 'Forex Trading' started by abeachbum, Nov 13, 2006.

  1. abeachbum

    abeachbum

    When I buy USD/JPY I am going long USD and short JPY.
    If I later sell EUR/JPY I am going short EUR and long JPY.
    My net JPY position is the sum of the short and the long.

    At the retail forex broker level, especially those brokers that don't charge separate commissions, I have to actually sell USD/JPY and buy EUR/JPY to "close" my positions.

    At the institutional level (using a forex platform like autobahn, fx connect, fxall, etc.), my positions are netted and I have the ability to balance my positions via other trades on different crosses.

    At the retail level it's like forex trading has become analogous to trading a "symbol" rather than the underlying currencies.

    As far as I know, fxcm, oanda, gft, and almost every other retail outfit require you to buy and sell the same pair to close a position.

    I am a newbie here, and I have read a number of posts were people criticize IB's TWS for not showing "positions". However, IB is one of the very few brokers offering a "netting" environment at a relatively low account minimum. Currenex also does true netting, but the account minimum is higher.

    Perhaps a "position" style trading account actually suits the trading style of some traders. But it doesn't seem like actually trading currencies where you are actually trading the components of the pair.

    Thoughts?
     
  2. HotSpot is another ECN type of model that has "netting" I believe.


    As far as I know, fxcm, oanda, gft, and almost every other retail outfit require you to buy and sell the same pair to close a position.