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#### Understanding Pre and Post Hedge Rules

Autospreader allows you to create and apply Pre and Post Hedge rules to the individual legs of a spread using the per-leg settings in the Autospreader configuration. You can set up Pre Hedge rules for any hedge leg to be evaluated and trigger a rule before sending a hedge order into the market after a quoting order fill. You can apply Pre Hedge rules only to spread legs in the Autospreader configuration.

For example, you could create a Pre Hedge rule that applies a negative payup tick to the hedge order when the best inside market quantity at the crossing market is greater than some specified value. The following illustration shows a formula that applies a negative payup tick to the hedge order price if the quantity on the opposite side inside market is greater than 50. When a quoting order fill generates a hedge order, Autospreader immediately evaluates the Pre Hedge rule. If the rule evaluates to true (OppositeQty > 50, in this case), Autospreader sends the hedge order using the specified negative payup tick. Otherwise (OppositeQty <=50), it sends the order as a normal hedge order as specified in the Autospreader configuration.

Hedge Rule Builder window

##### Using the DiffQty or QtyRatio Fields in Pre and Post Hedge Rules

It is important to note that Pre Hedge rules behave differently than Post Hedge rules when they include the DiffQty or QtyRatio fields. When the DiffQty or QtyRatio fields are used for a Post Hedge rule, all the depth starting at your working hedge order and including your hedge order quantity is compared with the quantity at the opposite inside market. When DiffQty or QtyRatio fields is used for a Pre Hedge rule, only your hedge order quantity is compared with the quantity at the opposite inside market. For example, if a Pre Hedge rule is set with DiffQty or Qty Ratio fields and your hedge order is quantity is 5 and the opposite inside market quantity is 10, the DiffQty would be 5 and the Qty Ratio is 2 or 200%.

If you want to compare the difference of both sides of the market without your own order, you can compare using Opposite Qty and Same side Qty fields. For example, create the following rule in Hedge Rule Builder: 'If Opposite Qty - Same side Qty is > x, then take action'.

Notes:

• When a Pre Hedge rule evaluates to true, the action defined in the rule overrides any of the standard payup ticks set for the leg in the Autospreader configuration. The payup ticks set for the leg in the configuration apply only when the Pre Hedge rule evaluates to false.
• When you set a Pre or Post Hedge rule for a spread leg in the Autospreader configuration, Autospreader automatically activates it and applies it to every hedge order.
• Pre Hedge rules can only apply to spreads that are either launched in Desktop mode or launched to an Autospreader SE 7.2 server or higher. Spreads launched to a pre-Autospreader SE 7.2 server will not support the Pre Hedge rule functionality and Pre Hedge rules will not be applied to a hedge order.