In retail forex, hedging refers to holding open buy and sell positions on the same instrument at the same time (often to offset risk or lock in part of a profit/loss). For example, if a robot is long 1 lot EUR/USD and then opens a 1 lot short EUR/USD, it’s “hedged” (the net position is 0, but both trades remain open). Outside the U.S., many brokers allow hedging – the trades simply offset each other’s P/L to an extent. However, in the U.S. this is not allowed (due to FIFO and anti-hedging rules). Some EAs use hedging strategies (instead of closing a losing trade, they open an opposite trade to mitigate loss). If your broker doesn’t allow hedging, such an EA will fail to execute those offsetting orders. Important: Even with hedging, both positions incur spread costs and swaps, and margin is required for each – so hedging isn’t “free” risk reduction, it’s just another strategy tool.

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