Everyone is talking about it! No more hedging on the same currency pair if you are using US-based brokers. The National Futures Association will be enforcing a Rule 2-43b that prevents a long and short being taken on the same currency pair at the same time with effect from 15 May 2009.
The reason given is that it is disadvantageous for a trader to be using such a strategy which incur costs (spread from long and spread from short) and these strategies are detrimental to trading. So for the sake of traders, brokers are not allowed to have hedging of the same currency pair.
So if you have a long order, and then issue a short order, your long will be closed, leaving your short order in place. You cannot have opposing trade orders in the same account for the same currency pairs.
If you must do it, open a different account, with one account doing long trades and another account doing short trades!
Implications for EAs are great. They have to be re-written. If the strategy has no changes, you need to split the strategy into two to be handled by two different accounts. How troublesome.
What about pending orders that are opposing? What if you have ensured that the orders are not triggered at the same time or ensuring that one is a market order and the other is always a pending opposing order. I posed that question to IBFX and their reply was “they don’t know the answer yet”.
Yes, it is going to be tricky if they don’t even allow opposing orders that consist of pending orders. A lot of other strategies has to be re-written. For example a Stop and Reverse strategy must really have the losing order “stopped” first before triggering a “reverse” order. And one must be careful to code in the spreads as well. A lot of precision and thinking now. No more sloppy strategy coding.
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