1. Your Bourse Platform User Guide
  2. MT5 Coverage Plugin

Coverage and Hedging Scenarios

Let’s consider several scenarios of how the Coverage Hedging functionality can be used.

In all the scenarios, we will use the following accounts as examples:

7771 - A-Book Coverage Account

7772 - B-Book Coverage Account

6661 - Aggregation account

3159 - Trading account

  1. The common Coverage Scenario

 

In this scenario, volumed opened/closed on the trading accounts will also be opened/closed on the coverage account.

To do so, the Coverage Plugin should be enabled in the MT5 Administrator.

 

 

  1. The Mapping Symbols Scenario

 

This scenario entails transferring the orders from the mapped symbols of the trading account to the core symbol (or another mapped symbol but with a different name) to the Coverage account.

Go to the MT5 Coverage Plugin section on the portal and set up from which symbol you want to make a transfer and to what symbol. For instance, we want to make a transfer of the EURUSD.c mapped symbol of the trading B-book account to the EURUSD core symbol of the coverage B-book account. It should look like this.

Then go to the MT5 Admin and enable the Coverage Plugin.

Then go to the MT5 Client Terminal. Open a “buy“ order for the EURUSD.c in the usual trade B-book account.

The order with the same volume (but in the opposite direction*) should be opened for the EURUSD symbol in the B-book coverage account.

*If the BBookSameSide parameter is selected, then the direction is the same as for the trading account trade.

Note! The same will work for the A-book trade account and A-book coverage account.

 

  1. Unconditional Hedging Scenario

 

The scenario refers to the situation when it’s possible to open/close an order for the trade B-book account, and then the same order volume will be transferred to the B-book coverage account plus customized increment value for the A-book coverage account.

Note! The opposite scheme, when the specified increment value is added to the B-book coverage account when trades are made on the A-book trading account, is not valid.

To enable this scenario, one should go to the MT5 Coverage Plugin section on the portal and configure the file in the following way:

This example of settings means that 3 lots will be transferred to the B-book Coverage account, and each 0.15 value up to the 3 lots will be added to the A-book coverage account. For instance, in the example with 3 the value of 3 will be added (0.15 x 20 = 3).

Then enable the Coverage Plugin in the MT5 Admin. Then go to the Client Terminal and buy 3 lots of EURUSD for the trading account.

The order should be opened on the trading account as well as on the B-book coverage account (same 3 lots), and 3 of lots should be added to the A-book coverage account.

Note! If the HedgingMultiplier parameter changes to 50, the algorithm works in the following manner: the trade volume is multiplied by the HedgingMultiplier parameter (that is, by 0.5), and the HedgingLotIncrement parameter is added until it approaches the result of the latter multiplication.

For instance, if you buy 2 lots of EURUSD on a B-book trade account and HedgingMultiplier is 50, and HedgingLotIncrement is 0.13 lots, then 2 lots will be multiplied by 0,5 = 1. And 0,13 lots will be added until they approach 1. The result will be 0.91.

Note! Bear in mind that it isn’t possible to choose values for HedgingMultiplier that contain fractions (0.3, 0,75, etc.).

 

  1. Conditional Hedging Scenario:

 

The scenario refers to the situation when one can open an order for the trade B-book account, and then the same volume will be transferred to the B-book coverage account plus customized increment value under the condition that the volume of the opened (or closed) order will exceed the value specified in the “MaxUnhedgedExposureLots“ value in the MT5Coverage JSON file.

To enable this scenario, one needs to go to the MTCoverage JSON file (inside the plugin folder for your MT5 Main Server) and configure the file in the following way:

It means that when the opened or closed order on the B-book account for EURUSD exceeds 5 lots (e.g. 6 lots), then 6 lots will be transferred to the B-book Coverage account, and each 0.15 value up to the 1 (6-5) will be added to the A-book coverage account. For instance, in the example with 6, the value of 0.9 will be added (0.16x6 = 0.9).

The save button should be pressed after the values are specified in the MT5Converage JSON file. Then the Coverage Plugin in the MT5 Admin should be enabled.

Then go to the Client Terminal and sell 6 lots of EURUSD.

The order should be opened on the trading account as well as on the B-book coverage account (same 6 lots), and 0.9 of lots should be added to the A-book coverage account.