Is it possible to use both trading methods with XMTrading? This article explains the prohibitions in FX trading accounts, how to do both, benefits, and precautions. At XMTrading, “dual denominated trading” is only possible within the same account. By making good use of double-denominated trading, you can not only hedge the risk in the event of sudden price changes, but also prevent forced loss cuts due to insufficient margin. However, depending on how you do it, you may be violating prohibited matters, and in the worst case scenario, your account may be frozen, so be careful.
XMtrading
| Operating company | Tradexfin Limited Fintrade Limited |
| Head office location | Unit E, F28, Eden Plaza, Eden Island, Republic of Seychelles |
| Founding year | 2009 |
| Financial License | （FSA）SD010：Tradexfin Mauritius Financial Services Commission (FSC：)：Fintrade Limited Cyprus Securities and Exchange Commission (CySEC)：Trading Point of Financial Instruments Ltd |
| Language support | English、日本語、Malay、Thai |
| Platform | MetaTrader 4 (MT4)／MetaTrader 5 (MT5) |
| Service Countries | Over 190 countries |
| Number of users | Over 1 million accounts |
| Max Leverage | 1000x |
| Eligible products | Forex、Metal、Stocks、Equity Indices / Index CFD、Energy CFD、Commodities、Cryptocurrency |
The Basics of Hedging at XM
We’ll explain the basics of hedging at XM in an easy-to-understand way, even for beginners.
What is hedging?
It is a trading method in which you simultaneously hold a “long” and a “short” position in the same instrument.
Example: Buy 1 lot and sell 1 lot of USD/JPY at the same time.
Is hedging possible at XM?
Yes.
However, you must adhere to XM’s rules.
Hedging permitted at XM
The following are acceptable as long as they are within the same account:
Buying and selling within the same account
Hedging on the same instrument and currency pair
Hedging using an EA (automated trading)
Prohibited Hedging Practices at XM
Hedging prohibitions at XM (XMTrading) are summarized in an easy-to-understand manner, including points that are often misunderstood. 👇
Hedging across multiple accounts
Using multiple XM accounts to simultaneously buy and sell the same currency pair or product is prohibited.
Example:
Buying USD/JPY in Account A & Selling USD/JPY in Account B → ✖️NG
This is prohibited as it could be an exploit of XM’s zero-cut system.
Hedging with other company accounts
Hedging by combining an XM account with an account at another FX broker is also prohibited.
Example:
Buying EUR/USD in XM & Selling EUR/USD at another company → ✖️NG
This may also be considered an attempt to achieve zero risk or arbitrage trading.
Hedging with multiple people
Hedging (buying and selling) in collaboration with friends, acquaintances, or third parties is also prohibited.
This is considered organized risk aversion or fraudulent trading and will result in penalties.
Arbitrage and Bonus Abuse
Using hedging to obtain bonuses or promotions fraudulently or for arbitrage trading is also a violation of the terms of service.
XM prohibits such risk-free (profit-only) trading.
✅ Officially Permitted Hedging
Hedging (simultaneous long and short positions) within the same account is permitted.
There is no problem with holding both long and short positions in the same account.
⚠️ Penalties for Violations
XM’s terms of service state that if prohibited transactions are found, the following actions may be taken:
Confiscation of profits
Suspension or freezing of the account
Voiding all trades
Suspension or closure of all accounts, etc.
Why XM Prohibits Hedging
XM prohibits/restricts hedging not simply because of personal preference, but to ensure fairness in trading and the integrity of its system. Below are the key points: 👇 To ensure real profits in both EUR and USD, please pay attention to the following:
🔎 1. Prevent Bonus and Campaign Abuse
XM offers promotions such as deposit bonuses and points (XMP). However, if hedging is used to secure profits without risk (risk-free trading), it can become a “bonus-only” transaction rather than the intended trade.
🚫 2. Prevent Abuse of the Zero-Cut System
XM has a system called Zero-Cut (no additional deposit required even if your account balance goes negative).
By hedging multiple accounts, even if one account incurs a loss, the loss is compensated by the Zero-Cut, while the other account secures profits, allowing for “risk-free trading.”
📊 3. Countermeasures Against Arbitrage
Among the methods using hedging and multiple accounts, there is a strategy known as arbitrage, which seeks to secure profits by exploiting price or rate differences between different accounts or brokers. This is also prohibited at XM.
🛡 4. Maintaining the Soundness of the Trading System
XM monitors all order and execution data,
and is able to detect unnatural order patterns and risk-averse trading.
If hedging across multiple accounts and in collaboration with other users becomes a common practice:
✅ The fairness of the system is compromised
✅ Movements that differ from normal market trading become more frequent
✅ Risk management becomes more difficult
These effects are why they are restricted by our terms of use.
The Pros and Cons of Hedging with XM
To help you understand what it’s like to actually use hedging with XM, we’ll summarize the pros and cons of the service and program from a practical perspective. Be cautious when using this feature on a trial-and-error basis. While it’s easy to cancel specific orders, you must be deliberate and timely.
Benefits of Hedging with XM
① Risk avoidance (hedge) during sudden market fluctuations
Temporarily lock in unrealized losses before and after indicator releases (e.g., employment statistics, CPI)
Effective as a “buying tactic” to avoid stop losses
👉 Example:
Afraid of a sudden drop but unsure of closing → Temporarily hold an opposite position
② Easily adjust positions
By settling only one side,
you can essentially settle and enter in installments
Flexible response while monitoring the market
③ XM officially allows hedging within the same account
As long as it is within the same account, it is not a violation of the terms of service
Can also be used with automated trading tools (EAs)
※ Hedging with multiple accounts or with other companies is prohibited (Important)
④ May help avoid forced stop losses
Temporarily prevent a decline in your margin maintenance ratio when unrealized losses are likely to rapidly increase
Disadvantages of Hedging with XM
① Spreads apply to both sides
Spreads are incurred on both buy and sell positions
The loss doubles the instant the position is opened
👉 Short-term trading is not so bad, but the more you trade, the more disadvantageous it becomes
② Swap points can easily become unfavorable
Even with hedging, swaps are incurred in both directions
For many currency pairs
👉 “Minus + Minus” situations are likely to occur
※ Particularly unsuitable for long-term holding
③ Margin is not completely offset
With XM, required margin does not become zero
Even with hedging, some margin is tied up
④ It is difficult to increase profits
Effectively stopping price movement
Useful for “escape” strategies, but difficult for “offensive” strategies
Points to Note When Executing Hedging with XM
Here’s a practical summary of the overview and points to note when executing hedging with XM, divided into “Terms and Conditions,” “Costs,” and “Practical Aspects.” The timing of right-clicking to close is crucial. Check the official website for prohibited activities. Consider capital and round-trip transaction costs when settling. Adjust your settlement based on the type and chart, such as micro or standard.
① Important Points Regarding Terms and Rules
❌ Hedging with Multiple Accounts or with Other Companies Prohibited
All of the following are violations of the terms and conditions.
Hedging between multiple XM accounts
Hedging between an XM account and another company’s FX account
Effective hedging using the names of family or acquaintances
Risk-free trading aimed at bonuses or zero-cuts
👉 Violations
May result in profits being confiscated, your account being frozen, or all accounts being suspended.
✅ Only hedging within the same account and with the same product is permitted.
② Cost Considerations
① Spreads are “doubled”
Spreads are incurred for both buy and sell positions
You effectively start in the red the moment you open a position
👉 Intended for short-term, limited-time use
② Swap points are unfavorable
Even with hedging, swaps are incurred in both directions
For many currency pairs, the “minus + minus” effect is significant
👉 Long-term holdings will inevitably increase losses
③ Margin is not completely offset
Even with hedging at XM, the required margin does not become zero
In some cases, the margin maintenance ratio does not improve
③ Practical Points to Note (This is the Most Important)
① Decide on an Exit Strategy Before Establishing a Hedging Position
Common Mistakes 👇
Establishing a Hedging Position for the Time Being
Unable to Undo the Hedging Position and Leaving It
Swaps Only Increase
Losses End Up Growing
👉 Before Establishing a Hedging Position, Make Sure to Decide:
Under What Conditions to Undo
Which Position to Keep
Maximum Holding Period
② Don’t Use It to Eliminate Losses
Hedging Positions
❌ Not a Method to Eliminate Unrealized Losses
⭕ A Method to “Fix” Losses
👉 It Only Postpones Decision-Making,
Not a Fundamental Solution
③ If the Market Doesn’t Move, You Can’t Make a Profit
You Can’t Benefit from Price Moves While Hedging Positions
To Increase Your Profits,
You Must Decide to Cut One Side
How to Undo a Hedging Position with XM
The process for undoing or changing a hedging position with XM is simple, but doing it incorrectly can lead to increased losses and a deterioration in your margin requirements.
Here, we’ll explain “safe and practical undoing methods” for each scenario.
If you don’t time your selection and click properly on the screen, you could end up losing money. When using a PC or smartphone, you’ll typically monitor the status of two types. The timing of selecting and tapping the undo button determines profit. This can vary greatly depending on the situation.
Undoing Method 1: Close Only One Side (Most Common)
Procedure
Open the “Trade” tab in MT4/MT5
Close either the unrealized loss (or unrealized gain)
Leave only one side of the position → Undoing the hedging position is complete
When to Use It?
The market direction has become clear.
A trend has begun to emerge.
The movement has calmed down after the indicator.
Caution
Price fluctuation risk recurs the moment you close your position.
The closing side will incur a realized loss equal to the spread.
Cancel Method 2: Close both buy and sell positions simultaneously (complete withdrawal).
Procedure
Close both buy and sell positions.
Features
End with unrealized gains and losses nearly offsetting each other.
The spread and swaps incurred up to that point will remain as realized gains and losses.
Suitable Cases
Unable to predict the market direction.
Want to stop trading altogether.
Want to completely eliminate risk.
Cancel Method 3: Keep the profitable side (practical).
How to do it.
Close the unrealized loss side.
Continue to hold the profitable side.
Key Points
Leverage price differences that arise during hedging.
However, there is risk in the event of a market reversal.
👉 Be sure to reset your stop loss line after canceling.
Cancellation Method 4: Partial Cancellation (For Advanced Users)
Contents
Partially close one side of the position.
Effectively “Partial Settlement and Cancellation”
Advantages
Flexible response to market fluctuations
Less psychological burden
Disadvantages
Complex management
Possible for increased error rates
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