No that is not anti-hedging but rather FIFO rule. First in first out. Trades taken first must be closed first.
So, say your long term play is collecting interest differential by doing BUY AUD/USD, there is always a risk of capital depreciation and risk aversion.
So, when risk aversion kicks in you need to do a sell AUD/USD to make up losses in your long term play. In the NFA system you need to close the buy (your First order) which is as good as a Sell AUD/USd in order to open the new sell (of the risk aversion).
FIFO is a standard practice in US equities and futures market.
Why exactly was it done? Many people think it was done to make sure broker houses dint cheat people to overtrade and steal the spread commisions. Truth is far from it , NFA is of the view that FIFO provides more accurate MTM calculations (something many people aren't aware of hence the confusion)
As many of us are dependent on that "high probability" setup to make money, it is inadverently a one way play. So, until unless you are a high flier having two directional play, it is as good as useless to have European broker.
@Yasir, I hope I got it right
@Preet, No offence meant while posting here. So, if you need me to remove this I will clean the post.
So, say your long term play is collecting interest differential by doing BUY AUD/USD, there is always a risk of capital depreciation and risk aversion.
So, when risk aversion kicks in you need to do a sell AUD/USD to make up losses in your long term play. In the NFA system you need to close the buy (your First order) which is as good as a Sell AUD/USd in order to open the new sell (of the risk aversion).
FIFO is a standard practice in US equities and futures market.
Why exactly was it done? Many people think it was done to make sure broker houses dint cheat people to overtrade and steal the spread commisions. Truth is far from it , NFA is of the view that FIFO provides more accurate MTM calculations (something many people aren't aware of hence the confusion)
As many of us are dependent on that "high probability" setup to make money, it is inadverently a one way play. So, until unless you are a high flier having two directional play, it is as good as useless to have European broker.
@Yasir, I hope I got it right
@Preet, No offence meant while posting here. So, if you need me to remove this I will clean the post.
