Alpha Futures Hedging Rules: Can You Hold Long and Short Simultaneously?

‍Alpha Futures permits holding simultaneous long and short positions on the same instrument—true hedging is allowed. You can be long 2 ES contracts and short 1 ES contract simultaneously if that's part of your strategy. The firm doesn't restrict directional exposure management the way some competitors do. That said, hedging within a single trading day has limited practical value given the EOD flat requirement, and the contract limits still apply to your gross position exposure.

Learned the hard way: I've traded Alpha Futures accounts across Standard, Advanced, and Zero plans—evaluation through funded. The rule breakdowns here come from real funded trading experience, including the Daily Loss Guard locks, EOD trailing drawdown mechanics, and consistency rule math that catches most traders off guard.

The biggest trap at Alpha Futures is how rules interact—DLG locking you out before you hit max drawdown, consistency percentages changing between Standard and Advanced, and news buffer windows stacking with DLG. I broke down every rule with real examples and compliance strategies in my complete Alpha Futures rules guide. For the absolute latest, check Alpha Futures' website.

What "Hedging" Means at Alpha Futures

True hedging involves holding opposing positions simultaneously. Long ES and short ES at the same time. Long NQ to hedge short ES sector exposure. The question for prop traders: does the firm allow this?

Alpha Futures doesn't explicitly prohibit simultaneous opposing positions. Your account can show +3 ES and -2 ES concurrently. The platform accepts these orders, the positions co-exist, and you're not flagged for rule violations.

However, "allowed" and "useful" are different things. Let's break down when hedging actually makes sense within Alpha Futures' rule structure.

Contract Limits and Hedging

Your position limits apply to gross contracts, not net exposure. This matters for hedging math.

Example on 50K evaluation (5 contract max):

• You go long 3 ES contracts
• You want to hedge with 2 short ES contracts
• Total gross position: 5 contracts (3 long + 2 short)
• Net exposure: 1 contract long

This works—you're at your 5-contract limit but hedged down to 1 contract of actual directional risk.

What doesn't work:

• Long 4 ES contracts
• Want to add 2 short ES contracts for hedge
• That's 6 gross contracts—exceeds your limit

The hedge itself counts against your contract ceiling. You can't use hedging to increase total exposure beyond limits. Some traders misunderstand this, thinking "I'm net flat, so position limits don't apply." Wrong. Gross contracts matter.

Practical Hedging Scenarios

Scenario 1: Locking in Profits

You're long 3 ES from 5100, price runs to 5115. You've got 15 points of open profit but uncertain whether to exit before a potential reversal.

Hedge approach: Short 3 ES at 5115. You're now flat in terms of P&L movement—locked at 15 points profit (minus spread costs). If market drops, your shorts gain what your longs lose. If market rises, your longs gain what your shorts lose.

This gives you time to evaluate without directional risk. Later, you close one side based on your read.

Alpha Futures consideration: This works during the session, but you must close everything by 4:59 PM. You can't hold the hedge overnight for "extended decision time." The hedge is purely an intraday tool.

Scenario 2: Scaling Into Reversals

You're long 2 ES, price drops against you. Instead of stopping out, you want to test a short thesis without closing your long.

Hedge approach: Short 1 ES at current price. Now you're net long 1 contract. If the short thesis is right, you can add more shorts, eventually going net short. If wrong, you close the short and remain with original long exposure.

This is essentially position averaging/rotating within your contract limit. Alpha Futures allows it.

Scenario 3: Cross-Contract Hedging

Long NQ (Nasdaq futures) but worried about broad market risk? Short ES (S&P futures) as a hedge.

This isn't same-instrument hedging but portfolio hedging. Both positions count against their respective contract limits. You'd be:

• Using NQ contracts from your NQ allocation
• Using ES contracts from your ES allocation

Alpha Futures allows trading multiple products simultaneously. Whether this constitutes smart hedging depends on correlation assumptions and your strategy.

When Hedging Doesn't Help

The EOD Close Requirement

All positions must close by 4:59 PM ET. This eliminates multi-day hedging strategies. You can't:

• Put on a hedge today and resolve it tomorrow
• Hold protective shorts overnight against long exposure
• Use hedges to manage gap risk

Every hedge must resolve within the same session. This limits hedging utility to intraday decision-making, not position management across days.

Transaction Costs

Every hedge involves trading both directions. On ES, you're paying spread and commissions twice—once to put on the hedge, once to take it off. For short-term hedges that resolve within minutes or hours, these costs matter.

If your "hedge" is really just indecision about direction, you might be better off closing the original position and re-entering when you have clarity. The hedge adds complexity and cost without clear benefit.

Complexity for Marginal Benefit

I've experimented with hedging on prop accounts. Here's my honest assessment: most of the time, it's overcomplication.

If you're long and the trade is working, take profit or trail a stop. If it's not working, cut it. Adding a hedge often means you're avoiding a decision rather than making one.

The times hedging genuinely helped: when I had a high-conviction setup in one direction but needed time to see confirmation, and didn't want to exit the original position prematurely. Maybe 10% of situations? The other 90% would have been better served by simpler position management.

Hedging and the Daily Loss Guard

On qualified accounts, the 2% Daily Loss Guard tracks your session drawdown. How do hedges interact?

Your P&L calculation includes all positions. A perfect hedge (long 3, short 3) has no P&L movement—price changes don't affect your balance. This means hedging can prevent triggering the Daily Loss Guard while you figure out direction.

Example:

• Account balance: $51,000
• Daily Loss Guard: $1,020 (2%)
• You're long 3 ES, down $800 on the position
• Getting nervous about triggering the guard

Hedge solution: Short 3 ES. Now you're locked at -$800 regardless of price movement. You can't lose more (which would trigger the guard), but you also can't gain without removing the hedge.

This gives breathing room—but it's also a form of paralysis. You've stopped the bleeding by stopping all movement. Eventually you need to make a decision, and the underlying problem (wrong directional bet) remains.

Alpha Futures vs. Other Firms on Hedging

Some prop firms explicitly prohibit hedging or same-instrument opposing positions. They view it as:

• Potential rule exploitation
• Unnecessary complexity
• Sign of trader indecision

Alpha Futures is relatively permissive here. They allow the positions, track gross contracts against limits, and let you manage your own strategy. Whether you use hedging intelligently is on you.

My Take on Hedging at Alpha Futures

I've largely moved away from using hedges on prop accounts. The EOD close requirement means hedges are always temporary—resolved within hours. For intraday trading, I'd rather make clean entry/exit decisions than layer complexity.

The one exception: when I'm in a position, see a potential reversal setup, but don't want to stop out yet. I might short 1 contract against my 2-contract long to reduce directional exposure while I watch. If the reversal confirms, I close the longs. If it fails, I close the short. It's essentially a way to step to the sidelines temporarily without fully exiting.

But this is maybe 5% of my trades. The other 95%: straightforward directional positions with stops and targets. Hedging adds management overhead that usually isn't worth it for day trading futures.

If you're coming from forex or options where hedging strategies are more central, you might naturally reach for those tools. They work at Alpha Futures—the platform allows it. Just consider whether the EOD close requirement and intraday timeframe make them practical for your specific approach.

Hedging Strategy Guidelines

Do consider hedging when:

• You need decision time without directional risk
• You want to test a counter-thesis without closing your main position
• Approaching Daily Loss Guard and want to lock current P&L
• Managing correlated exposure across multiple contracts

Don't rely on hedging for:

• Avoiding stop-losses (you're just delaying decisions)
• Circumventing position limits (gross contracts still count)
• Multi-day position management (EOD close prevents it)
• Simple directional trades (adds unnecessary complexity)

The tool exists. Use it when it genuinely serves your strategy. Ignore it when simpler approaches work better.

‍