Aggregate Vs Hedging CFD. Which mode do you use?

I’ve watched the T212 video on this but I’m not 100% clear what the advantages / disadvantages are with each mode.

Let’s say I have four separate buy positions open on a single stock. I buy at €100, €101, €102 and €103 in hedging mode.

Should I have done this in aggregate mode instead? I’m not actually hedging anything as you can see. I’m going long on each trade.

For the folks here who use CFDs, what are your preferences?

Agg mode - just merges them all into one.
Hedge mode - split them.

Personally, hedge mode gives you more flexibility.

The benefit from Agg mode is that it always lowers your average cost, the cheaper you buy.
The benefit from Hedge mode is that you can take profits from some trades without having to close others they may still be in a loss.

Both outcomes end the same, but you have more options available to you with hedge mode.
But it can start to look messy if you keep buying say 10 different times, resulting in 10 open positions.

I have some practice aggregate trades open at the moment. If I want to cash out a bit of profit, let’s say I want to take €50. Are you saying that not possible in aggregate mode?

The sell option is available to me so it looks like i can partially sell some CFDs from my boohoo position here. However no monetary value appears… Is this because I’m not actually in profit yet?

In agg mode, you can sell a portion sure. But it sells a portion of the whole lot.

Example:
Agg mode -
Buy @ 10
Buy @ 5

Your cost price is now - £7.50
You make profit if it gets above 7.50.

The main difference towards this and hedge mode:
Buy @ 10
Buy @ 5

You have two positions open, not just one now.
So if the price goes to 6, you can sell the second buy for a £1 profit.
But the other order is still £4 in loss.


Hope this makes some sense lol

So the main difference is agg mode, merges all of your buys into one position. It can either bring your average cost price down or up. You make money only when the whole lot becomes in profit. Whereas in hedge mode, you have the option to take profit on the positions that are up and still keep open the positions that are at a loss, as they are all individual positions and not merged into one.

1 Like

Is hedging not just trading in the opposite way? For example:

buy quantity 1
market reverses
sell quantity 2 (1 quantity to make a profit, 1 quantity to cover loss first position)

Don’t know if hedging is allowed at CFD. Never tried. Some brokers only allow it on a special account.

You can do it i’m 99% sure.

1 Like

Hedging is allowed for sure xD using it personally

1 Like

@adm had it explained well. Hedging is just reducing your exposure to risk, its like taking an umbrella with you when its sunny, when your app tells you theres a 10% of rain today. If it rains you have it to use whilst others get wet. Or betting on another horse in a race.

Interesting etymology on hedge

"

It began to be used in relation to financial transactions, in which a loan was secured by including it in a larger loan, in the early 17th century. Initially, the phrase associated with this form of hedging was ‘hedging one’s debts’, for example, John Donne’s Letters to Sir Henry Goodyere , circa 1620:

“You think that you have Hedged in that Debt by a greater, by your Letter in Verse.”

‘Hedging one’s bets’ was coined later in that century. It referred to the laying off of a bet by taking out smaller bets with other lenders. The purpose of this was to avoid being unable to pay out on the original larger bet. The phrase was first used by George Villiers, the 2nd Duke of Buckingham, in his satirical play The Rehearsal , 1672:

“Now, Criticks, do your worst, that here are met; For, like a Rook, I have hedg’d in my Bet.”

The verb ‘to hedge’ derives from the noun hedge, that is, a fence made from a row of bushes or trees. These hedges were normally made from the spiny Hawthorn, which makes an impenetrable hedge when laid. To hedge a piece of land was to limit it in terms of size and that this gave rise to the ‘secure, limited risk’ meaning. Hedge funds, much in the news nowadays, take their name from their method of limiting, that is, hedging, their risk.

"

3 Likes

OK so my aggregated CFDs in practice mode are now in profit so I can ask my next question “live”.

I have 50 Buy CFDs with Intrum Justicia. Currently €17.86 in profit.

image

I want to take €10 profit out. How can I do this?

I’ve put in an order to Sell 10 shares, but nothing is appearing in the form circled in red. I thought it would show a value which I could adjust until I get to €10.

image

Is taking €10 worth of profit possible?

@pipo You need to close whole position it is not available to close only part of it afaik. To take profit you’re not putting another order, to take profit you have to click “take profit” on your order screen and set value which interest you as you would like to take 10£ of profit only you will achieve it straight away as it is above that value or simply on the “take profit” section mark 20£ and when such situation occurs your order will be closed
As @adm mentioned below, my answer fits only for hedging mode, haven’t noticed you are in aggregate mode, sorry

edited
see aliens post below, he hit it on the head. :+1:

In aggregate mode your multiple orders are combined and treated as one order. You can’t close part of the agg. the same way you can’t close part of a single order.
In general, to take the profit you don’t place a new order in the opposite direction, you just close the position.

1 Like

P.S. In your screen shot the amount in the red circle is zero because you are “netting” against the existing order, meaning you are placing a new order in the opposite direction to the existing, and in that case there is no margin.

1 Like