Which best broker allows hedging in the same account for US clients? | Forex Factory

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Which best broker allows hedging in the same account for US clients?

  • #1
  • First Post: Feb 19, 2012 8:35pm Feb 19, 2012 8:35pm
I'd love to find a big name broker that allows hedging in one account. By that I mean a broker like Oanda will not do. They allow me to hedge by having long positions in my main account and short positions in a sub account, but I want to have open and long in the same account.

This is primarily so an EA can manage my positions properly.

Any suggestions?
  • #2
  • Feb 19, 2012 9:39pm Feb 19, 2012 9:39pm
Quoting permanentjaun
I'd love to find a big name broker that allows hedging in one account. By that I mean a broker like Oanda will not do. They allow me to hedge by having long positions in my main account and short positions in a sub account, but I want to have open and long in the same account.

This is primarily so an EA can manage my positions properly.

Any suggestions?
Check out FXDD, ATC, IBFX, FXCM, and possibly others too

I believe some of them may allow hedging on your platform which will work for the EA's as the netting off is done in their back office
  • #3
  • Feb 20, 2012 8:15am Feb 20, 2012 8:15am
So it doesn't look like this is possible. Here is a discussion I had with an FXCM representative.

Thank you for your patience. A representative will be with you shortly. If you experience any issues updating to the latest version of the Trading Station, then please visit our support page for solutions to reported issues: visit FXCM Status.
You are now chatting with 'FXCM - Brad G'
FXCM - Brad G: Welcome to FXCM's Live Chat. How can I help you?
Matt: Hello. I have a question about hedging.
Matt: I am located in the US.
Matt: I am looking for a broker that will allow me to hedge a currency in the same account.
FXCM - Brad G: it is not permitted in a single account, however you can have two accounts and go long in one and short in the other
FXCM - Brad G: we can even link them together and you can see both accounts under one login
FXCM - Brad G: is that something you would like to do?
Matt: That depends
FXCM - Brad G: depends on what?
Matt: I want to be able to manage the overall position with an MT4 EA which needs to be able to see the floating profit/loss/equity
Matt: Would linking the accounts to the same login allow me to do that?
FXCM - Brad G: unfortunately there isn't any MT4 broker that will offer that in the US.
FXCM - Brad G: I understand what you are looking for and MT4 isn't able to do so and be compliant with US regulations (unfortunately)
Matt: Do you know if I am allowed to open off-shore accounts?
FXCM - Brad G: if you live in the US, then no, it is not possible to do so.
FXCM - Brad G: if you have an overseas address (and proof of that address) then we can likely setup a UK account for you
FXCM - Brad G: proof is: utility bill, bank statement, etc that is listed in another country
Matt: Do UK accounts allow for hedging in the same account?
FXCM - Brad G: yes, but you must have a non-US address to open one
Matt: I understand.
Matt: Do you have any materials or links that explain why hedging was decided to not be allowed in US accounts? I'm simply interested to know.
FXCM - Brad G: you would need to contact the NFA for that
FXCM - Brad G: http://www.nfa.futures.org/
Matt: Ok.
Matt: Thank you very much. Have a good day.

So I then have two questions.

1. Was this rep correct in saying that even if they combine the two accounts into one login that the MT4 EA will not be able to manage my hedge based on profit/loss/equity?

2. If the MT4 EA can not do this then is he also correct in that I will not be able to open an off-shore account with anyone?


Also, anyone have a clue as to why new regulations would not allow for hedging in the same account?

Thanks,
Matt
  • #4
  • Feb 20, 2012 10:09am Feb 20, 2012 10:09am
Check with fxdd and atc. I'm pretty sure they both allow it
  • #5
  • Feb 20, 2012 11:12am Feb 20, 2012 11:12am
It's a confusing topic. FXDD said they don't allow US client to hedge, but that it's possible in the MT4 platform and will show no position in the back office.

ATC gave a more detailed standard response:

Marisol: In order to abide by the CFTC no hedging rule, the counter party offsets the positions as they receive the orders. When orders are placed on the MetaTrader 4 platform, the hedging features is remained available. For example, if you buy and sell a contract on the MT4 software, you will notice your positions are hedged on the interface, however, the orders that have been sent to the counter party have been offset with each other. Your net position remains the same on the MT4 and the FXCM back office. When you close your hedge positions on the MT4 software, the new buy and sell orders placed will be offset with each other by the counter party and again your net positions on the MT4 and the FXCM back office remain the same.

Someone care to explain that to me? I confirmed with the rep that it would show I have open long and short orders. They then suggested I speak with their sales dept. Is that saying it would show two open orders, but that in reality the orders were closed when I opened the second of the two orders? Not fully understanding this.
  • #6
  • Feb 20, 2012 2:09pm Feb 20, 2012 2:09pm
As far as i know US clients only able to open account at US regulated brokers. and there is no US regulated brokers that allow hedging because of the regulation.
  • #7
  • Mar 7, 2012 5:33am Mar 7, 2012 5:33am
Does anyone know if FXDD allows hedging from a us account.
I want to run a hedging EA and can only have one account for it to work.
fxdd demo account allows hedging.

or can any suggest a good broker to run a hedge EA on from a us account


Quoting permanentjaun
It's a confusing topic. FXDD said they don't allow US client to hedge, but that it's possible in the MT4 platform and will show no position in the back office.

ATC gave a more detailed standard response:

Marisol: In order to abide by the CFTC no hedging rule, the counter party offsets the positions as they receive the orders. When orders are placed on the MetaTrader 4 platform, the hedging features is remained available. For example, if you buy and sell a contract on the MT4 software, you will notice your positions are hedged on the interface,...
  • #8
  • Mar 7, 2012 5:38am Mar 7, 2012 5:38am
I thought it is illegal for US resident to hedge regardless of the broker unless you have a address outside the US and even then it could be ify if your resident in US.
  • #9
  • Jun 7, 2012 5:34pm Jun 7, 2012 5:34pm
I asked both the FXCM and FXDD reps who called me after signing up for a demo if my EA that hedges would work, and they both said yes, that they have back office solutions, so I'm not sure.
  • #10
  • Jun 8, 2012 9:20am Jun 8, 2012 9:20am
What a number of US brokers are offering for clients who want to hedge is "Netting" (i.e. FXDD, ILQ, ATC Brokers).

ATC has a fairly good definition of netting:
Quote
In order to abide by the CFTC no hedging rule, the counter party offsets the positions as they receive the orders. When orders are placed on the MetaTrader 4 platform, the hedging features is remained available. For example, if you buy and sell a contract on the MT4 software, you will notice your positions are hedged on the interface, however, the orders that have been sent to the counter party have been offset with each other. Your net position remains the same on the MT4 and the back office. When you close your hedge positions on the MT4 software,...


To the client (you or I) it looks like hedging, heck, it IS hedging on the MT4 platform. I'm not an expert on the topic, it was explained to me that the only difference is for the broker in the backoffice, when they take our trades THEY still need to abide by FIFO/hedging regulation and do so. It essentially "aggregates" those positions you've placed. So for example, say you're long 1.0 (a full lot) EUR/USD, you then open a short 0.5 lot position on the EUR/USD - after netting to the broker it looks like you're only long 0.5 lots EUR/USD in one position. While to you on your MT4 platform you see 2 hedged positions.

A number of US brokers are looking into ways to offer this to clients. With Dodd-Frank, FIFO/Hedging being outlawed you can imagine that volume would and has decreased. FXDD, ILQ, ATC Broker, now PFG Best are all offering netting by default. At Alpari-US you can request to have netting enabled on your account (more info: http://www.alpari-us.com/en/faq/netting.html)
  • #11
  • Aug 3, 2012 10:54am Aug 3, 2012 10:54am
I'm currently demoing ILQ as they too allow back office hedging and non-fifo. Again as stated by many, it's transparent to the MT4 platform so works with EA's

I've noticed a lot of comments about it being "illegal" for US residents to open accounts at non CFTC brokers. I've yet to see or read anything official that speaks to the "legality" of a US citizen trading forex or any other investment instrument offshore.

What the Frank/Dodd act addresses (from what I can figure out) is the NFA and CFTC requiring brokers not offer hedging, etc. to US based traders.

The regulations are stipulated to and enforced on the brokers, not the traders.

If anyone has anything different they can point to I would love to see it to clear this up in my mind.
  • #12
  • Aug 3, 2012 12:38pm Aug 3, 2012 12:38pm
Here's a good read on the ruling.
http://www.nfa.futures.org/news/PDF/...Adj_112408.pdf

Especially note toward the bottom of page 6. Notice it's dealing with "FDM"s (Forex Dealer Members) and their compliance.
  • #13
  • Oct 20, 2012 1:40pm Oct 20, 2012 1:40pm
Quoting spyderman
I'm currently demoing ILQ as they too allow back office hedging and non-fifo. Again as stated by many, it's transparent to the MT4 platform so works with EA's

I've noticed a lot of comments about it being "illegal" for US residents to open accounts at non CFTC brokers. I've yet to see or read anything official that speaks to the "legality" of a US citizen trading forex or any other investment instrument offshore.

What the Frank/Dodd act addresses (from what I can figure out) is the NFA and CFTC requiring brokers not offer hedging,...

All US brokers are going to tell you the same thing. They all say it is illegal to open an off shore account and that you cant hedge in the US. The truth is you can open an account off shore as long as the off shore broker is not regulated by the US. I currently have an off shore account and have been with them for over a year now. The Broker I use is one of the best Brokerage firms I have ever been with. I have no restriction on how I trade and I Hedge the markets all day and make good money. When I want to make a draw the money is in my account in just 3 days. The NFA does not want US clients to succeed in trading. Trading is hard enough as it is and all the stupid rules that the NFA has made make in imposable to make money. The only way you can really make money is to have an off shore account. I would love to help any one in the US get an off shore account. I hate the NFA and I am sure I am not alone on that.

Bryan
  • #14
  • Oct 21, 2012 4:39am Oct 21, 2012 4:39am
To go back to the initial question, check FinFx. They accepted US customers a while ago with no hedging or Fifo rule, just check if it's still the case.

If I hear of other brokers, I will update here, but there are not many that propose this today ;(
  • #15
  • Jul 18, 2013 11:16am Jul 18, 2013 11:16am
Quoting shaffe101
{quote} All US brokers are going to tell you the same thing. They all say it is illegal to open an off shore account and that you cant hedge in the US. The truth is you can open an account off shore as long as the off shore broker is not regulated by the US. I currently have an off shore account and have been with them for over a year now. The Broker I use is one of the best Brokerage firms I have ever been with. I have no restriction on how I trade and I Hedge the markets all day and make good money. When I want to make a draw the money is in my...
shaffe101, I'm interested in hearing more about setting up offshore account to achieve hedging and higher leverage. can you tell me more. I'm a us citizen.
  • #16
  • Last Post: Dec 8, 2016 7:12am Dec 8, 2016 7:12am
Quoting jr2dr
{quote} shaffe101, I'm interested in hearing more about setting up offshore account to achieve hedging and higher leverage. can you tell me more. I'm a us citizen.
It is illegal to use hedging on one single account with all US brokers.The way out is to use brokers that are not regulated by the US. I use hedging strategy all day and my broker is FxGlory. I have been using them since 2014 without any challenges. They are one of the best brokerage firms I have ever been with. I freely Hedge the markets most of the time and make reasonable profits. The good part is that I usually get my withdrawal requests completed in less than 24 hours.
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