XM Hedging Rules: What Is Allowed, How Margin Works and What Is Banned

"Does XM allow hedging?" has a short answer and a longer one. The short answer is yes, inside one account. The longer answer covers how XM counts margin on a hedge, what a hedge really costs you, and the one version of hedging that XM prohibits. This guide covers XMTrading, the XM brand CB-Dogs is an introducing partner of.

Key takeaways

• XMTrading allows hedging (holding a buy and a sell on the same instrument) within the same account, on every account type.
• Hedging across two different accounts is not allowed. XM's guide also lists hedging against another broker as prohibited.
• For FX, gold and silver, equal opposite positions in one account need zero margin, so you can open a hedge even when your margin level is below 100%. Other instruments still need 50% margin on hedged positions.
• A hedge is not free: you pay spread on both legs, swap can hit both legs, and the account stays exposed to stop-out if equity falls.
• Each account can hold at most 200 open positions plus pending orders. Hedged volume and cashback follow the rules on our hedging and rebate eligibility page.

What a hedge is

A hedge, in the sense XM's rules use, is holding a buy and a sell on the same instrument at the same time in the same account. If you are long 1.00 lot of EURUSD and you open a short 1.00 lot of EURUSD, your net exposure to the EURUSD price is zero. Profit on one leg offsets loss on the other, and both legs stay open until you close them.

Traders do this to freeze a position through a news release without closing and re-entering, to protect floating profit while waiting for a signal, or to avoid realising a loss they expect to recover. On MT4 and MT5 hedging is the natural behaviour of an account that keeps buy and sell positions separate. Hedging on correlated pairs is a different, looser technique, covered in forex correlation and hedged pair costs.

What XM allows and what it prohibits

The reason is simple. A hedge inside one account is something XM can see and manage. A hedge across accounts moves risk between accounts, so XM treats it as a way to take profit without taking real market risk, or to farm bonuses and points. XM's guide notes that with common platforms such as MT4 and MT5, trade histories can be compared across brokers, so a cross-broker pattern is visible. For the account types themselves, see XM account types compared.

What can happen if you cross the line

XM's guide says violations can lead to cancelled profits, a frozen account or forced closure of positions. We cannot say how a particular case would be judged, and that is exactly the point: you carry the risk, and cross-account hedging gives you little that a normal in-account hedge does not. The same principle applies at other brokers, which commonly bar cross-account and cross-broker hedging in their own terms. If you close the two legs of a hedge at different times, note that XM's guide suggests using the platform's "Close By" function (MT4 "Multiple Close By") to settle both legs together.

How XM counts margin on a hedge

This is the part that surprises people. Normally, every open lot locks margin. For a hedge, XMTrading changes the rule by instrument:

• FX pairs, gold and silver: when you hold equal lots on both sides in one account, the required margin on that hedged portion is zero. XM states this means you can open a hedge even if your margin level is below 100%.
• Other instruments (indices, energies and so on): hedged positions still need 50% of the normal margin.
• Unequal lots: only the matched portion is hedged. The extra lots on the bigger side still require margin as usual.

A simple example with made-up numbers: you hold 1.00 lot long and 0.60 lot short on EURUSD. The 0.60 lot matched on both sides needs no margin. Margin is required only on the unmatched 0.40 lot. The same holds for XAUUSD. How much margin one gold lot needs at each leverage is in gold margin per lot explained.

Zero margin does not mean zero risk to the account. Your margin level is equity divided by used margin. When a hedge drops used margin to zero, the level stops being informative, but floating losses, spread and swap still change equity. Our guide to margin call and stop-out explains the thresholds. On XMTrading all four account types show a margin call at 50% and a stop-out at 20%.

The real costs and risks of hedging

A hedge removes price exposure, not cost. Before you open one, price these items.

1. Spread is paid twice. Opening the offsetting leg means paying a second spread. A hedge held for an hour has already paid for two entries.
2. Swap can hit both legs. Each leg earns or pays swap separately, and the two do not always cancel. On many instruments one side pays more than the other receives, so a long-held hedge drains the account slowly. Read your symbol specification and the swap explainer. Wednesday triple swap applies to both legs.
3. Commission on Zero accounts. The Zero account charges commission on each leg you open, so a hedge adds to cost there too.
4. Stop-out can still happen. If you keep the hedge but also hold other unhedged positions, or if swap and spread erode equity, a deep drawdown can trigger stop-out. A common failure is closing only the winning leg of a hedge and leaving the losing leg exposed.
5. Unhedging is a decision with two parts. You must choose which leg to close and when. A hedge can postpone a decision without removing it.
6. Gaps and widening spreads. Around news, spreads widen on both legs, and gaps can move the two legs' closing prices by different amounts.

On the protection side, XMTrading applies negative balance reset to all clients, so you cannot lose more than your deposit. See XM negative balance protection. That protects your deposit, not your ability to keep the account open.

Hedging, cashback and rebate eligibility

Cashback from CB-Dogs is paid on the commission XMTrading reports for your account, so the question "does my hedged volume count?" follows the same rules as for any broker. Our page on hedging and forex rebate eligibility explains it: ordinary hedges held for a normal duration generally qualify, and the pattern that may be excluded is a near-simultaneous opposite position on the same instrument that nets to little real exposure. Hedged volume at XMTrading follows the rules on that page, and the final word is the broker's own report of the commission actually paid.

The current rates by XMTrading account type are in the table below. CB-Dogs pays 60% of the commission actually received.

Two practical points. First, a cross-account hedge is a terms-of-service problem at XM, not just a cashback problem, so it is never a good way to generate volume. Second, if your strategy depends on hedging, compare your total cost with the rebate included using the cashback calculator, and remember that a rebate reduces your cost but cannot make a loss-making hedge profitable.

A pre-hedge checklist

• Are both legs on the same account and the same instrument?
• Do you know the current swap on both legs for your account type?
• Will your margin level and stop-out still be safe if your unhedged positions move against you?
• Do you have a plan for which leg you will close, and when?
• Are you under the 200 positions and orders limit?

Frequently asked questions

FAQ

Does XM allow hedging?

Yes, inside the same account, on all XMTrading account types. Hedging between two different accounts, or between XM and another broker, is not allowed according to XM's guide.

What is XM's hedging margin?

Can I hedge between two XM accounts?

Is there a limit on open positions at XM?

Does hedged volume earn cashback?

Related reading

• Hedging and forex rebate eligibility
• Margin call and stop-out explained
• XM account types compared
• XM negative balance protection
• Forex correlation and hedged pair costs

Ready to trade with cashback? Register with CB-Dogs and link your XMTrading account.