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Hedging In Trading Forex (I)

When a trader entered into the forex market with the intention to protect existing positions or to anticipate a movement which is not desirable in the forex market, they can be said to have entered the forex hedging (hedging). By utilizing hedging correctly, then a trader who entered the trade buy foreign currencies to protect against downside risk, while a trader who entered the trade sell foreign currency pair, can protect against upside risk.

The main method of hedging in the forex is a retail trader through spot contracts and foreign currency options. The spot contract is essentially a kind of regular trading made by Forex traders. Due to contractual spot has a short-term delivery date (two days), it is not the most effective hedging. Regular spot contracts are usually the reason that hedging is needed instead are used as hedging itself.

Foreign currency options however one of the most popular methods of hedging. As with other types of options such as securities, foreign currency option gives the trader the right, but not a bond, to buy or sell a currency pair at a certain exchange rate at some time in the future. Regular option strategy can be used, such as long straddles, long strangles and bull or bear spreads, to limit potential losses from a given trade.

Hedging Strategies
In a hedging strategy developed in four sections, including forex trader risk exposure analysis, risk tolerance and preferences of strategies. These components form a forex hedging:
Analyze risk:
Traders must be able to identify the types of risks they made good in their current positions or to be lived. From there, take the time to identify what are the implications for not hedging risk, and determine the risk of high or low on the forex currency market today.

Determining risk tolerance:
In this step, the Broker uses their own level of risk tolerance, to determine how much risk positions that have been taken so that needs to be hedging. Trading will never have zero risk;’s up to the trader to determine the level of risk they are willing to take, and many of them are willing to pay to eliminate the risk of overload.

Determining forex hedging strategy:
If using foreign currency options to reduce risk hedging in currency trading, the trader should determine which strategy is usually most effective to use.

Monitoring Strategy:
By ensuring that the strategy is working as it should, then the risk will still be minimized.


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Hedging In Trading Forex (I)
 
I tried to do hedging to prevent further loss. But I was not able to succeed because I am ot knowledgeable and I just close the two open trade in losing positions. Since my trading is not going anyway. It's not losing any further nor it is gaining any profit at all.
 

ProTrader

Forex Supporter
I tried to do hedging to prevent further loss. But I was not able to succeed because I am ot knowledgeable and I just close the two open trade in losing positions. Since my trading is not going anyway. It's not losing any further nor it is gaining any profit at all.

Hedging require knowledge and experience. If you are not too familiar with it then you must test it on demo account before apply on real account.
 
Hedging require knowledge and experience. If you are not too familiar with it then you must test it on demo account before apply on real account.
Theirs also different approach and different way to use hedging. That's why hedging is not as simple strategy as you think. I'm also doing hedging and one of my account get MC while the other account get profit after three months of waiting and holding and praying that I will not going to get MC. Because too early closing of the opposite pair means I can loss big. To late to close opposite pair can also cause me to loss.
 
I like to hedging in my trading, but sometimes it is full of risky. We do not get any profit because in one hand we get profit but in the other hand and in the same time we suffer loss. Hedging is only to protect our fund but we do not get profit.
 
With Forex trading securing, you are basically putting a bet in both guidelines of the industry. You are putting a buy and a offer order on the currency couples. This allows you to protect your bet to decrease your danger in the Foreign exchange industry and possibly benefit from activity in either route. This needs exercising and if done effectively, it is a good expertise to have as a Forex investor.
 
I like to hedging in my trading, but sometimes it is full of risky. We do not get any profit because in one hand we get profit but in the other hand and in the same time we suffer loss. Hedging is only to protect our fund but we do not get profit.
You can't say the game is over until the final bell rings. In hedging its the same. Since you choose to use hedging strategy you know that hedging only ends when you close both position. So having two position open or one position open means the hedging strategy is not yet finish and its means your still not losing until you close your last position.
 
is using hedging is necessary for a newbie who does not want to experience a great loss, but we also have to know and understand how the strategy works. because if we are going to misunderstand automatic movement is not a benefit even harm waiting. therefore those who do not yet understand hedging strategies using this strategy.
 
I tried to do to prevent further loss hedging. But I could not succeed because I am knowledgeable and I just ot the two open trade close in losing positions. Since my trade is not yet. It does not lose any further nor is it any profit at all.
 
Hedging is not the kind of trade which you will just do it like that without having a special skills in forex trading what I normally do is to try my possible best and make the right analysis for more profit outcome.
 
to make the analysis of price movement we can see how the actual price movement is moving and what steps we need to do when faced with such price movements, especially now the price movement of any currency pair is very different from all that we have to really carefully read price movement is running
 
This price movement which you are talking about is it on hedging or are you talking about hedging ?because what I know is that the price movement is very fluctuating a times and the movement of the market is base on the news and high impact news.
 
Hedging does not seem to be a good idea especially for those traders that are beginners.Because this idea can be really hard.Hedging is especially followed only by the expert traders or the traders that understand this strategy properly.because if you use this strategy and then you become unable to figure this out properly,you are surely going to lose.

It is not that hard to understand the things here in forex trading but when we move to complex things that really require some experience then that is a different case.Because most of the times we can see that the traders think something as easy but later on it becomes really hard and ultimately they happen to lose.
 
yes,i have try this strategy too for several times and it gives me margin call once.I think this strategy will work only for senior traders that had an accurate analysis about the trend,because my biggest problem is that i always confuse when should i open the lock or should still wait because i can not predict the trend is it will be still going or will reverse,and this strategy is needed an extra patience too
 
true, we can not simply apply the hedging strategy without serious study because the actual hedging strategy is very hard to for us to apply especially for beginners who are new to trading, especially in the hedging strategy is urgently needed mental mastery and control emotions better because hedging strategy strategy is a very difficult choice for our use
 
Hedging is some how complicated strategy. You are looking for long term in here. When you trade forex trading and you do hedging you need to compute how much is the daily volatility and how much is is the total volatility of one pairs support to resistance level. Usually I compute already the strong support and resistance level of a pair that I want to trade for three months to know if I can survive and make profit or not.
 
Hedging is undoubtedly a very working strategy for most of the traders. Somehow its not applicable for all of the situation and a trader will not be bale to use it while breakouts as hedging works perfect when the market is moving inside a channel and bounces from resistance and supports consecutively.
 
hedging require experience and information. If you are not too acquainted with it then you must analyze it on trial consideration before implement on real consideration.
 
Hedging is a good strategy if you know how to trade. Problem with so many traders is that they assume they understand hedging and think that they do hedging but actually don't have any idea how to use hedging. I saw many posters who claim they loss money because of hedging and when you ask them what is hedging their answer is simple. Opening two opposite position and they call it hedging right away. lols.
 
I prefer hedging by trading two pairs which has strong correlation, a fine example in this case should be EURUSD and USDCHF, according to research, its correlation is average 80%. So, if someone wants to hedge, it is better to buy (sell) EURUSD and do reversely for USDCHF than trading the same pairs.
 
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