Dislikedthere is NOT an extra spread to pay!
pretend the market is at 1.3000 bid, 1.3002 ask. we buy 10 lots at the 1.3002 ask price. now, if we "hedge" the position, we will short at the bid of 1.3000. if we instead use a regular order to close the position, we will also short at 1.3000. both result in having no position (dispite what the platform shows). where is the difference here? the hedge and the regular order are exactly the same!Ignored
If you "hedge" the position you would short at 1.3000, and the hedged position would be -2 pips for the spread. So you would have a buy at 1.3002 with -2 open, and a sell at 1.3000 with a -2 open position. Net -4 pips, double spread. If you opened the position at 1.3002 and then closed it immediately, you would net -2 for the 1 positions spread.
Also, most brokers will only charge you for 1 position worth of margin, but it is still using up your margin. There are still a few brokers that will charge both positions worth of margin. I don't hedge and haven't looked into it, so I don't know if there are brokers that release your original margin when you hedge. Brokers come in all flavors, so I'd imagine there is.
Just googled for a swap chart and took the first one, but you would also be losing swap daily. Hence my story of the 6 months worth of negative interest slowly bleeding the trader dry. He had over 80% of his margin tied up in the hedge, it was alot of money lost daily in swap.
http://www.dukascopy.com/swiss/english/forex/overnight/
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