Is Hedging Allowed?

No, hedging is not allowed at Pivex. This trading strategy involves holding opposite positions on the same asset in order to protect against potential losses. While hedging can be used to minimize risk in certain market conditions, it does not align with our focus on consistent and disciplined trading.

What is Hedging?

Hedging in trading is essentially the practice of opening two or more positions on the same or related assets in opposite directions to reduce the risk of loss. Traders often use this strategy to protect themselves from adverse price movements.

For example, let’s say you’re trading Tesla (TSLA) in the CFD market:

• Scenario 1 (Hedge Buy and Sell Position):
  • You buy 100 TSLA shares at $700 (expecting the price to go up).
  • At the same time, you open a short position of 100 TSLA shares at $700, essentially betting the price will go down.

This means you’re simultaneously long (buying) and short (selling) on Tesla at the same price. If the price of Tesla moves up, your long position profits, but your short position incurs a loss. If the price moves down, your short position profits, but your long position loses money. However, the net result of both positions combined could be close to zero, essentially reducing any market exposure.

Why is Hedging Prohibited?

Hedging is prohibited at Pivex because it goes against our core principle of encouraging consistent, disciplined trading. While hedging can help to minimize risk in certain volatile situations, it also encourages traders to take positions that are not based on the market’s true directional movement. It can lead to over-leveraging and artificially low risk exposure, which does not demonstrate genuine skill or market understanding.

The primary goal of our trading system is to identify traders who can consistently make profitable decisions based on market trends, rather than relying on complex strategies to reduce exposure.

Prohibited Trading Strategies:

• Hedging: Not allowed
• Martingale: Not allowed (doubling down on a losing position to recover losses)
• Grid Trading: Not allowed (placing buy and sell orders at fixed intervals)
• High-Frequency Trading (HFT): Not allowed (executing many trades within short periods to capture small price movements)

If you have any further questions or need clarification on trading rules, feel free to reach out to our support team for assistance!