What is cross-account or cross-firm hedging?
Quick answer
Cross-account hedging means opening opposite positions on two accounts, at one firm or at two different firms, so that one account is likely to pass or profit while the other breaches. The trader effectively guarantees a pass at the cost of a fee. Firms prohibit it because it is not trading skill.
Detailed answer
How it works:
- Account A buys gold, account B sells the same amount.
- One account will gain what the other loses.
- The winning account passes or earns a payout; the loser is written off.
Detection:
- Opposite trades at matching times and sizes across accounts linked to one person.
- Accounts with very similar trade histories but opposite outcomes.
Cross-firm hedging is hard to see from inside one firm; terms that prohibit it and payout reviews of suspicious patterns are the main controls. Within one account, PropExecutor's no hedging rule refuses opposite positions on the same instrument; across accounts, detection relies on comparing deal histories.
Signs to look for
- Two accounts opening opposite positions within seconds.
- Matching sizes and instruments.
- One account breaching while the other passes or profits.
- The same payment method or identity behind both.
Any two of these together justify a closer review before a payout.
PropExecutor team · Updated
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