Bray, self control and self discipline is what it's all about!!!
I was doing quite a bit of reading about when and how the CFD providers hedge and it is quite interesting. This is my understanding of it.
Market maker brokerage accounts generally don't need to hedge for retail traders as much as you think for the following reasons:
The have many clients which are taking positions each way so they automatically hedged a certain amount.
They also have quite clever software algorithms which would identify which traders and trades are most likely to lose based on the characteristics of successful traders (frequency of trading, position size, account size, stop size).
The combination of these factors and their risk appetite would give them how much they would be need to hedge. I would expect for new traders they just expect them to give up most of their money until they start to trade in a more consistent & disciplined way.
They treat experienced traders and those who are "swinging a big line" quite differently as they are much more likely to win and if they do they will win big. For these they probably just hedge most of it and earn their money from the commission, spread and interest.
