What is a net position
A net position is what remains when you add up all your long (buy) exposure and subtract all your short (sell) exposure in the same instrument. Netting is the process of combining those opposite positions into that single figure.
The formal version: the net position in an instrument is the sum of signed volumes. Long volume counts as positive and short volume counts as negative. Volumes are measured in lots or in units of the contract size. A positive result is net long, a negative result is net short, and a result of nothing is "flat".
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Worked example (hypothetical)
Take a hypothetical trader in EUR/USD. Letters stand in for amounts:
| Step | Action | Net position |
|---|---|---|
| Open | Buy A lots | Long A |
| Add | Sell B lots, where B is smaller than A | Long A − B |
| If B equals A | Sell volume matches buy volume | Flat |
| If B is larger than A | Sell volume exceeds buy volume | Short B − A |
The price movement that affects this trader's profit and loss is driven by A − B, not by A and B separately. Costs can still apply to each leg separately. If you need real figures for lot value or margin, use the tools on Calculators.
Netting in trading platforms
MetaTrader 5 has two position accounting modes:
- Netting mode. Only a single position per symbol exists. A new opposite order reduces, closes or reverses it. A same-direction order increases it, and the open price becomes an average.
- Hedging mode. Each order opens its own position, so a buy and a sell on the same symbol can both stay open. The terminal lists them separately, but your economic exposure is still the net figure. The "Close By" function closes an opposite pair against each other.
MetaTrader 4 works in a hedging style, with separate positions. On MetaTrader 5, the mode is set at account level by the broker. If you use Exness, check which mode your account uses in the Exness personal area or on the official site.
Where else the term appears
- News and reports. Futures positioning reports describe "speculators' net long" or "net short" positions in a currency or commodity.
- Banks and dealers. A "net open position" in foreign currency is the bank's unhedged exposure.
- Clearing. Payment netting and multilateral netting reduce many obligations to a single amount owed per party. This is often done through a central counterparty. See clearing and settlement.
- Close-out netting. If a counterparty defaults, all open contracts are valued and combined into a single net claim.
- Statements. Your account statement lists individual deals. The net position is something you derive from those deals.
Edge cases experienced traders should know
- Netting applies to the same instrument only. EUR/USD and GBP/USD are not netted, even when they are strongly correlated. See the correlation coefficient.
- In hedging mode, swaps and spreads apply to each leg. A flat hedged pair can therefore keep costing money. See swap fees.
- Margin on opposite positions may be reduced or charged in full, depending on the broker's rules.
- In netting mode, an opposite order larger than the open position reverses it. This can happen by mistake if the volume is entered wrongly.
Leveraged CFD and forex trading can lose money fast. A net position that looks small can still move sharply. See risk management.
Frequent questions
What does netting mean in simple words?
Netting means adding buys and subtracting sells in the same instrument to get a single figure for your real exposure.
Is a hedged position the same as a flat net position?
Your price exposure is the same. The costs and margin treatment can differ, because each leg may be charged separately.
Does netting remove risk?
It removes price exposure only between matching opposite positions in the same instrument. It does not cover other symbols, gaps or costs.
Where can I find more terms like this?
See the trading glossary and trading basics.