What is position netting?

Netting is the process of consolidating positions in the same instrument and on the same account that have opposite directions and thus fully or partially reduce the total market exposure. It is the process in which a buy and sell position are matched to close each other out, or yield a remainder if they are of different value. As an account can have positions in the same instrument opened at different times, the netting can be applied in different ways (Netting Methods) and at different times (netting modes).

Which position netting modes are available at Saxo?

Two Netting Modes are available. In both cases, the timing of the trade settlement is unchanged but open and closed positions are displayed differently.

1. Real-time / Intraday Netting (Recommended) 

The positions are netted immediately upon execution and will disappear from the Positions module and will be visible as new entries in the Closed Positions module.

2. End-of-day Netting (Legacy)

After trade execution, positions continue to show as open in the Positions module until end-of-day processing. The Closed Positions module is not available in this Netting Mode.

Which position Netting Methods are available at Saxo?

Two Netting Methods are available:

First-In-First-Out (FIFO)

If a new trade has the opposite direction of an existing position in the same instrument, FIFO netting closes eligible open positions in the order of their creation date/time, using the oldest first.

Weighted-average

With Weighted-average netting, open positions are shown at their volume-weighted average cost (i.e. a synthetic Position Open Price is calculated and displayed).
If a new trade has the opposite direction of an existing position in the same instrument, the profit and loss (P&L) is calculated using the synthetic Position Open Price.
This simplified example illustrates how the Netting Methods work:

As illustrated above, the selected Netting Method can influence the split between realised and unrealised P&L. However, the overall P&L of the entire position remains the same regardless of the Netting Method used.