Nice article, but no explanation how realy to use hedging in the forex.Is what the broker marks as hedge in his platform realy a hedging or just a way of get rid of your funds more quickly?I only use it when i se atrade is going wrong, instead of be stopped out i wait for the countertrade an hedge any move worthwile against my open position.Close the hedge as soon price resumes his original move from the open position.U get summing profits even when the trade goes the wrong way, till you end up on the support level strong enough to turn arround.There u can hedge then all the moves worth while again going contra your position.This ceep up till make profit with your position, or till you made enough to close bad position.Bit tricky tough and needs a lot of attention.But works, i tried it and with succes.
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I think this article explains it a lot better.
http://www.fxtrading.com/hedging.php
Good luck and best wishes.
Your right that the article doesn't explain how to implement hedging strategies.
The article is not that helpful. For instance, the end quote that: "hedging should be left to the Pros of the industry unless you are playing the forex market as a hobby and don't have a lot invested in it" is crap.
I have never heard of an individual who want to be a failure at a hobby or anyone who loves to throw money away.
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Thanks was very helpfull to receive a clear describtion of hedging in forex.
I only get stuck with the correct moment to hedge, do we hedge as early as possible after opening our position? Or do we hedge when we expect a reverse of trend .Personaly i think a good use of entry orders in that case could be intresting.But thanks again for the helpfull info.
Kind regards,
gge2008
hedging in forex is covering your open position (s) with a counterposition.
The reason to hedge can be that there is a news coming out what can give a big countermove to your original position or to cover a open position against a shorter countertrend form the original direction.
As i found out it is relevant for the safety of your account to use a combination from stop loss and hedge posibility.If you realy see that the trend completely changed better stop your loosing position and stay with your hedge position(from that moment this will be not seen anymore as a hedge since the original (loosing) position is closed).
If you stay to long with both positions open it could dammage your account severe.It is very tricky to follow it up with both positions open...and stressfull.
So to ceep it short:Hedge we only do when expecting a counter trend move against our open position.
Hedge we do for a shorter period , unless we have a big trading capital behind us to cover us for a rebounce .
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Hedging means protecting an investment from long-term changes in the market. The various hedging strategies, taken by both private and corporate traders, yield good profits at a minimum risk by neutralizing the market's volatility. Companies, for example, usually perform hedging, when they purchase a product from a foreign company, and the payment for it will only be transferred at a later stage. These companies use various kinds of hedging techniques in order to maintain the value of the currency, since a rise means loss.
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Hedging practices are under examination as currency volatility threatens profitability. However, those that were bullish on the currency's prospects and locked in hedges at higher rates are now struggling. I think people that did 100 percent hedge have to look deeply at their strategy.
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