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Net off & force open


Guest coopjames

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19 hours ago, coopjames said:

The advantagaes, disadvantages please, of "Net off & force open", in finding trade direction!

hey @coopjames 

Net off and force open refer to how we handle the trade in relation to other trades you have open at the time. If you have a long trade (buy) open of say 10, and open a short (sell) for 3, force open would make both the 10 long and 3 short reflect on your account. If you choose Net off in the same example as above the sell trade would 'eat' into the original 10, and leave you with a single trade for 7 long (buy). 

Trade direction can't be aided by the above. Hope this helps. 

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Guest backwardation
7 hours ago, backwardation said:

Net off does have advantages and there is a real difference.

example:  You have a long term position that is very profitable and you expect it to move much more.  However there is a serious risk that it may reverse (or at least experience a lot of volatility) due to the NFP reading.  You can hedge your position by opening the reverse position using netoff an hour before the NFP.  You can then sit on the sidelines for a while until you see a clear direction or until the dust settles.  There are also strategies that strictly work in net off.

Also if you are an adrenaline junkie oil gambler/trader like me, netoff can save you from a margin call or a blown position.

I said this entirely backwards.  Sorry!  Here's what it should say:

Force Open does have advantages and there is a real difference.

example:  You have a long term position that is very profitable and you expect it to move much more.  However there is a serious risk that it may reverse (or at least experience a lot of volatility) due to the NFP reading.  You can hedge your position by opening the reverse position using Force Open an hour before the NFP.  You can then sit on the sidelines for a while until you see a clear direction or until the dust settles.  There are also strategies that strictly work in net off.

Also if you are an adrenaline junkie oil gambler/trader like me, Force Open can save you from a margin call or a blown position.

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Guest forexhippo

Hi, Can someone explain how to use Net Off, very confusing. And can IG have a video to learn how to use Net Off or Force Open.

 

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Guest backwardation

Net off does have advantages and there is a real difference.

example:  You have a long term position that is very profitable and you expect it to move much more.  However there is a serious risk that it may reverse (or at least experience a lot of volatility) due to the NFP reading.  You can hedge your position by opening the reverse position using netoff an hour before the NFP.  You can then sit on the sidelines for a while until you see a clear direction or until the dust settles.  There are also strategies that strictly work in net off.

Also if you are an adrenaline junkie oil gambler/trader like me, netoff can save you from a margin call or a blown position.

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This is a prominent question for me also as a heavy user of the API, I feel that the documentation for this is lacking (On the API side) What do we need to set in the API to be able to hedge? I presume the first trade we would need to set Force Open to False, Then the hedge trade Force Open to True? However...

[Constraint: If a limitDistance is set, then forceOpen must be true]
[Constraint: If a limitLevel is set, then forceOpen must be true]
[Constraint: If a stopDistance is set, then forceOpen must be true]
[Constraint: If a stopLevel is set, then forceOpen must be true]
[Constraint: If guaranteedStop equals true, then set only one of stopLevel,stopDistance]

Does this mean that I cant hedge if I want to use a Guaranteed Stop? 

 

Perhaps someone from IG can chime in? 

Edited by TheGuru12
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6 hours ago, idanigtf said:

Related to this old topic...

How can I set Force open on my mobile IG Trading App (iOS)?

Does this setting on the IG trading platform/web also apply for the mobile app?

Thanks,

Dan

Hi @idanigtf,

On iOS once you are on the dealing ticket, just below size you should have a field saying "When Filled", from there you can select Force open or Net off.

Alternatively, if you tap on Account at the bottom right-hand corner of the app, then Settings then Net Off / Force Open you can activate to show the option on the ticket and select an option as default.

I hope that it helps !

All the best - Arvin

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Regarding the original question:

From a logical perspective, force-open trades do not make sense at all. Don't use them ever.

Example:

  • Netted order: I open a position on the EUR/USD and pay a spread of 10$. The symbol stays constant for one minute, and then I close the position again. Result: (i) I lost 10$. (ii) There is no market risk related to the EUR/USD anymore.
  • Force open: I open the same position on the EUR/USD and pay a spread of 10$. The symbol stays constant for one minute, and then I place a force-open order in the opposite direction, by which I pay again 10$ spread. Result: (i) I lost 20$. (ii) There is no market risk related to the EUR/USD anymore.

Summary: The direct result of a force order is -- in financial terms -- exactly the same as for the netted order, however, I pay two times for the spread.

For a netted order, if I absolutely plan to enter again after the close of the position, say, the next day, it becomes almost identical to a force-open order -- as in this case, I would have to pay a second spread on re-entering the market.

But still force-open is slightly worse. Reason: (i) paying money tomorrow is better than paying it today, and (ii) maybe you also change your mind on the the decision to re-enter? 

The only irrational advantage of force-open is if you have a very profitable position, which makes you glad every day by looking at it. You want to avoid the risks for, say, one day, but thereafter want to continue to be pleased every day. Then force-open could make sense. However, be aware that this is irrational behavior.

Best regards,

David

 

 

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