Thanks for the explanation. Very well explained. What world of unthoughtful programmers do you live in? IBKR allows you to put through any order any time anyhow you want. They just execute when they match. You said "hedging" so I got interested. IBKR also has a hedge feature but really you can do that same thing by adding another order so it's really useless and aesthetic. You can do it faster using their API than selecting with mouse clicks anyway. But what got me interested was that your said hedging was banned. What does that mean? How can anyone stop you from hedging? Hedging being buy one thing and another thing to lower your risk.
I'm afraid that you got confused by the used terminology. Forex brokers (the ones who usually provide MT4/MT5) have a different usage of the words "hedging" and "netting". Your IBKR account is an example of a netting account: for any instrument you get to see your net position size, resulting from multiple buy and sell orders. In MT4/MT5 this works differently. Here you can have multiple open positions, in the same instrument (e.g. EURUSD), with an opposite sign. This is called a "hedging account". So you can be both long and short at the same time in an instrument. In MT4/MT5 you have to specify which of the open positions you want to close. If you have multiple open positions in one instrument and you close one of them, the net result is that you still hold an open position as the others still remain.
LOL welcome to the world of spot forex. I used a US broker 10 or so years ago but the FIFO was driving me crazy so I left. I have not tried IBKR, I looked into IB some years ago but I didn't proceed (I don't recall the reason).
This is interesting. Yes, I can't have both a short and a long position of same instrument on IBKR. If I take the opposite position it simply liquidates my other position. IBKR keeps only one account so it just liquidates positions as soon as money is there. Even if I deposit USD it applies it to my short USD position which is not nice. What if I don't want my short USD position to be liquidates at an odd hour by an administrator who deposits the money... I thought MT4/MT5 is just a software and nothing to do with broker. So, should I look for MT4/MT5 from a broker to know if they allow multiple positions open or not? I haven't tried, but maybe one can be short CFD on a pair on IBKR and long the actual currency. Still, that is only two positions.
I understand the confusion. It happened to me. I had an account for a number of years with IBKR before I opened an account at a forex broker because I wanted to experiment with MQL5 on MT5. It is then that I got to understand that things can be very different from what you're used to at IBKR. Indeed, it is broker dependent. The broker will specify whether you will be getting a hedging account or a netting account. In some cases, not often, does the broker allow you to choose.
Usually opening multiple positions is not an issue? Or does the anti-hedging legislation in the US make that a problem?
Yes it is just software but what is allowed and what is not allowed is dependent on the broker's server which is configured as per the regulations which apply to your region, The opposite trade restriction and fifo is US specific. Many US traders get around these rules by opening trading accounts with unregulated or loosely regulated brokers but then they risk not seeing their money again. Even if you open an account with regulated UK or Australian brokers they will be complying with US regulations. Most traders don't need to open opposite positions but if hedging forms part of your trading strategy then you could do what you've mentioned Or you could operate 2 separate trading accounts and go long in 1 account and short in the 2nd.
No this is not an issue so if you are averaging into a position with multiple trades you can open as many trades as it is allowed by your account's leverage.
Thanks. 1- So if the broker software allows it then in MT4/MT5 software this can be done as well. If broker doesn't allow it on their own software then MT4 and MT5 can't do it either. Am I getting that right? 2- Side question: Why use MT4 / MT5 and not just broker provided software. I mean, what is a real life example that gives an edge? 3- You mean they lie on the application and say they are not a US person while they are? Few brokers applications I saw require one to declare if they are a US person or not very clearly. True, you can open two accounts but second account has to be in someone else's name (in case of IBKR for example) and trading their account without being a professional is not allowed I think. Also, two account only gives two positions. What if someone digs themselves a hole and wants to have 10 positions (5 long and 5 short) - (thinking they will get to riches anytime now) - on the same pair then they will need 10 accounts and having only one wife this can be hard to achieve. 4- What are the best brokers in the world after IBKR? (I haven't found any other broker beat them for fees).
Yes because MT4 and MT5 connect to the broker and send trade execution commands Unsophisticated traders are unlikely to get an edge from MT4 or MT5 but it is popular because the data feed is free and because it is widely used in the forex/cfd trading community. As a popular SW, there are virtually thousands of free indicators and scripts available for it and traders download and install these various tools which make their lives easier. I use MT4 because it is highly customizable and I can automate my trading strategies and have my open trades managed in a way which gives me an edge. They don't necessarily lie on the application. The requested ID docs will clear up any confusion. There is no such thing as a best broker, there are +ves and -ves with all of them as there are pluses and minuses with their software platforms too, so we simply sign up with a broker who meets most of our requirements.