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What is the hedging


What's the hedging in the trading online?


Hedging is simply coming up with a way to protect yourself against big loss. Think of a hedge as getting insurance on your trade. Hedging is a way to reduce the amount of loss you would incur if something unexpected happened.

We use usually direct hedging. Is when you are allowed to place a trade that buys a currency pair and then at the same time you can place a trade to sell the same pair.
While the net profit is zero while you have both trades open, you can make more money without incurring additional risk if you time the market just right.

The way a simple forex hedge protects you is that it allows you to trade the opposite direction of your initial trade without having to close that initial trade. It can be argued that it makes more sense to close the initial trade for a loss and place a new trade in a better spot. This is part of trader discretion.

As a trader, you certainly could close your initial trade and enter the market at a better price. The advantage of using the hedge is that you can keep your trade on the market and make money with a second trade that makes a profit as the market moves against your first position. When you suspect the market is going to reverse and go back in your initial trades favor, you can set a stop on the hedging trade, or just close it.

There are many methods for complex hedging of forex trades. Many brokers (USA) do not allow traders to take directly hedged positions in the same account so other approaches are necessary. A way is to use stop&reverse. Is the same way to open a direct hedging, but is difficult to monitorize the floating loss for each pair.






The private videos about hedging strategies. You can purchase the videos pack in products.