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Next: see what margin a hedged pair needs
The margin calculator shows the margin held for a position size and leverage, so you can see what a second, opposite position adds on an account that charges margin on both sides.
What is included
- How the bot works, step by step
- The arithmetic of the ladder or grid, with tables
- How it fails and how to test it honestly
- The tools that check the numbers
Who it is for
- People thinking of using this kind of bot
- People already running one and wanting a stress test
- Readers comparing bot types before buying
- Not advice, and not a recommendation to use one
Key facts
- Hedging in forex means holding a long and a short position on the same pair at once. The price risk on the matched amount cancels.
- A hedge fixes exposure. It does not undo a loss already made: whatever the price does next, the matched amount no longer changes the result.
- In the made-up example below, a 100 pip drop on 1 lot is -$1000. The hedge adds $64 of spread and swap over 10 days, so the locked total is -$1064 (calculated by us on 29 Oct 2026, exact).
- Whether a broker lets you hold both sides, and how it charges margin for them, varies. Check your own account terms.
- Recovery bots use hedges to freeze a losing position while they wait. The cost of waiting is the page's main point.
What hedging a position means
To hedge is to take a second position that moves opposite to the first. In forex, the plain version is to hold a buy and a sell of the same size on the same pair. If the pair rises by 10 pips, the buy gains 10 and the sell loses 10. The net is zero before costs. The same holds if it falls.
A hedge is not the same as closing. A closed position has realised its result and has no exposure. A hedged position still exists as two open trades, and each of them still carries spread and overnight swap. The exposure is frozen, not removed.
Full and partial hedges
A full hedge matches the size exactly, and the net exposure is zero. A partial hedge is smaller, say half the size, so half of the exposure remains. The arithmetic below uses a full hedge, because it is the clearest.
Rules differ by account
Some accounts allow both sides on one pair, some net them into one position, and some charge margin on one side only. This page cannot tell you which applies. It varies by broker and account type, so read yours. The margin side is covered in the margin calculator.
Why a hedge fixes exposure but not cost
A hedged pair of positions has two costs that do not cancel. First, each side was opened across the spread, so each paid it. Second, swap is a charge or credit for holding a position overnight, and the two sides rarely have equal and opposite swap. Often both sides are charged, or the credit on one side is smaller than the charge on the other.
Then there is the loss you already had. If you hedge after a fall, that loss is locked in at the price where the hedge opened. It will not come back while the hedge stays. It can only come back if you remove the hedge at a good moment, which means taking back the price risk.
A worked example with made-up numbers
A trader buys 1.0 lot of a pair quoted in dollars at 1.1000. One pip is worth $10 per standard lot on a pair quoted in dollars. The price falls 100 pips to 1.0900, an open loss of -$1000. At that moment a 1.0 lot sell is opened as a hedge. All of this is made up:
- The spread is 1.2 pips, or $12, paid when the hedge opens and again when it is closed.
- Swap on the long is -$6 a day and on the short is $2 a day. The net is -$4 a day, or -$40 over 10 days.
The table shows the result after 10 days at three prices. Everything was calculated by us on 29 Oct 2026 and is exact.
| Price | Long result | Short result | Both, before costs | Both, after costs |
|---|---|---|---|---|
| 1.0800 | -$2000 | $1000 | -$1000 | -$1064 |
| 1.0900 | -$1000 | $0 | -$1000 | -$1064 |
| 1.1000 | $0 | -$1000 | -$1000 | -$1064 |
At all three prices the pair of positions gives the same result: -$1000 before costs and -$1064 after the $64 of costs. The price moved 200 pips across the table, and the hedged result did not move. That is the whole effect of a hedge. The costs are the part that keeps growing the longer it stays open: here -$40 of swap over 10 days, and the clock is still running.
To end it, someone must close one or both sides. If the long is closed first and the price then rises, the short loses. If it falls, the short gains and the long is gone. Removing a hedge is a new bet on direction.
How recovery bots use hedges
A zone recovery bot opens an opposite position when the price moves a set distance against the first one, then flips again at the other edge of the zone, each time with a larger size. Each hedge freezes the situation for a while, and the aim is to close everything when the price finally moves enough in one direction to cover the accumulated loss.
Two things go wrong. The sizes grow, as in a martingale, so the next flip needs more margin. And every open leg pays swap and was opened across the spread, so the cost of waiting rises with each step. The margin call page shows what happens when margin runs out before the price comes back.
A grid does the same thing at a different scale: see forex grid trading. Some designs also hedge with a different pair that tends to move with the first. That leaves a gap that can widen, so the exposure is reduced and not fixed.
How to check a hedging bot
- List the cost per day of the hedged state in dollars, and multiply by the longest wait in the test.
- Find the deepest point of the account, not only the closed trades. The max drawdown must include floating losses.
- Ask what the account does if the price never returns to the zone.
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FAQ
Frequently Asked Questions
What is hedging in forex?
Holding a buy and a sell of the same pair at once, so price moves on the matched amount cancel out. It freezes the exposure and is not the same as closing the trade.
Does a hedge remove a loss?
No. It stops the loss from growing or shrinking on the matched amount. The loss stays until the positions are closed.
What does a hedge cost?
Spread on each side when opened and closed, and swap for every night held. Both vary by broker, pair and day.
Can I hedge on any account?
Not always. Some accounts net opposite positions into one, and margin treatment for hedged pairs varies. Read your own account terms.
Why do recovery bots use hedges?
To freeze a losing position while waiting for a move that clears the whole loss. The wait costs swap and spread, and the sizes often grow.
Are the numbers on this page real?
Example numbers are made up to show how the maths works, and the page says so. A figure only counts as exact when the page says it was calculated on a stated date. Nothing you enter in a calculator leaves your browser.
Can I use this to decide whether to run a bot?
It can show whether a bot's numbers hold together and how much an account can lose. It cannot say what the market will do, and it is not advice. Use it to ask better questions, then read the terms of your own broker or exchange.
Is this financial advice?
No. It is general education. Every number is made up, and real spreads, swaps and rules differ.
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