Hedging

Hedging orders are similar to Bracket Orders. With hedging order, a child order is submitted only on execution of the parent. Orders can be hedged by an attached forex trade, Beta hedge, or Pair Trade, just as in TWS:

Hedging Orders in TWS

For an example of a forex hedge, when buying a contract on a currency other than your base, you can attach an FX order to convert base currency to the currency of the contract to cover the cost of the trade thanks to the TWS API's Attaching Orders mechanism.

•         public static Order MarketFHedge(int parentOrderId, string action)
          {
              //FX Hedge orders can only have a quantity of 0
              Order order = MarketOrder(action, 0);
              order.ParentId = parentOrderId;
              order.HedgeType = "F";
              return order;
          }

  ...

              //Parent order on a contract which currency differs from your base currency
              Order parent = OrderSamples.LimitOrder("BUY", 100, 10);
              parent.OrderId = nextOrderId++;
              parent.Transmit = false;
              //Hedge on the currency conversion
              Order hedge = OrderSamples.MarketFHedge(parent.OrderId, "BUY");
              //Place the parent first...
              client.placeOrder(parent.OrderId, ContractSamples.EuropeanStock(), parent);
              //Then the hedge order
              client.placeOrder(nextOrderId++, ContractSamples.EurGbpFx(), hedge);

•     public static Order MarketFHedge(int parentOrderId, String action) {
          //FX Hedge orders can only have a quantity of 0
          Order order = MarketOrder(action, Decimal.ZERO);
          order.parentId(parentOrderId);
          order.hedgeType("F");
          return order;
      }

  ...

          //Parent order on a contract which currency differs from your base currency
          Order parent = OrderSamples.LimitOrder("BUY", Decimal.ONE_HUNDRED, 10);
          parent.orderId(nextOrderId++);
          parent.transmit(false);
          //Hedge on the currency conversion
          Order hedge = OrderSamples.MarketFHedge(parent.orderId(), "BUY");
          //Place the parent first...
          client.placeOrder(parent.orderId(), ContractSamples.EuropeanStock(), parent);
          //Then the hedge order
          client.placeOrder(nextOrderId++, ContractSamples.EurGbpFx(), hedge);

•         Public Shared Function MarketFHedge(parentOrderId As Integer, action As String) As Order
  
              'FX Hedge orders can only have a quantity of 0
              Dim Order As Order = MarketOrder(action, 0)
              Order.ParentId = parentOrderId
              Order.HedgeType = "F"
              Return Order
          End Function

  ...

          'Parent order on a contract which currency differs from your base currency
          Dim parent As Order = OrderSamples.LimitOrder("BUY", 100, 10)
          parent.OrderId = increment(nextOrderId)
          parent.Transmit = False
          'Hedge on the currency conversion
          Dim hedge As Order = OrderSamples.MarketFHedge(parent.OrderId, "BUY")
          'Place the parent first...
          client.placeOrder(parent.OrderId, ContractSamples.EuropeanStock(), parent)
          'Then the hedge order
          client.placeOrder(increment(increment(nextOrderId)), ContractSamples.EurGbpFx(), hedge)

• Order OrderSamples::MarketFHedge(int parentOrderId, std::string action){
      //FX Hedge orders can only have a quantity of 0
      Order order = MarketOrder(action, 0);
      order.parentId = parentOrderId;
      order.hedgeType = "F";
      return order;
  }

  ...

      //Parent order on a contract which currency differs from your base currency
      Order parent = OrderSamples::LimitOrder("BUY", DecimalFunctions::stringToDecimal("100"), 10);
      parent.orderId = m_orderId++;
      parent.transmit = false;
      //Hedge on the currency conversion
      Order hedge = OrderSamples::MarketFHedge(parent.orderId, "BUY");
      //Place the parent first...
      m_pClient->placeOrder(parent.orderId, ContractSamples::EuropeanStock(), parent);
      //Then the hedge order
      m_pClient->placeOrder(m_orderId++, ContractSamples::EurGbpFx(), hedge);

•     @staticmethod
      def MarketFHedge(parentOrderId:int, action:str):
      
          #FX Hedge orders can only have a quantity of 0
          order = OrderSamples.MarketOrder(action, 0)
          order.parentId = parentOrderId
          order.hedgeType = "F"
          return order
      

  ...

          # Parent order on a contract which currency differs from your base currency
          parent = OrderSamples.LimitOrder("BUY", 100, 10)
          parent.orderId = self.nextOrderId()
          parent.transmit = False
          # Hedge on the currency conversion
          hedge = OrderSamples.MarketFHedge(parent.orderId, "BUY")
          # Place the parent first...
          self.placeOrder(parent.orderId, ContractSamples.EuropeanStock(), parent)
          # Then the hedge order
          self.placeOrder(self.nextOrderId(), ContractSamples.EurGbpFx(), hedge)

Note that in some cases it will be necessary to include a small delay of 50 ms or less after placing the parent order for processing, before placing the child order. Otherwise the error "10006: Missing parent order" will be triggered.