Netting Account

What Netting Account means

On a netting account an instrument can hold only one position at a time. A new order in the same direction increases the volume and recalculates the average entry price; an order in the opposite direction reduces the volume, and if it is larger than the existing position it closes it and opens a new one the other way. Buying and then selling the same instrument therefore realises a profit or loss rather than creating two opposing tickets. This is the standard model in exchange-traded futures and equities.

The advantage is a clean and honest picture of exposure and margin. Because opposing trades cancel, the account cannot hold offsetting positions that consume margin, pay two spreads and accrue swap on both sides while producing no net directional exposure. It also matches how professional risk systems and regulators think about a book, and it is why fifth-generation retail platforms introduced netting alongside the older hedging model.

Netting is not merely a preference in some jurisdictions. Retail forex clients of brokers registered in the United States must be handled on a netting basis with first-in-first-out offset under national futures association rules, so opposing positions in the same pair are closed against each other automatically. Traders who move between regions or between platforms should check which model an account uses before assuming an opposing trade will open a new ticket.