I would appreciate your valuable opinion on the following issue:
If (for any reason- profit protection or prevention of loss) I would like to hedge an existing long cross currency position I have two options. Either to simultaneously sell the equivalent amount of the pair (if my broker account permits it) or to sell two times the USD components of the pair. For example, to hedge a 100,000 long EURJPY if I sell 100,000 EURUSD and 100,000 USDJPY what will be the implications for the trade? Under what circumstances can I get a perfect hedge? (Note: use of multiple margins is not an issue).
Thanks
If (for any reason- profit protection or prevention of loss) I would like to hedge an existing long cross currency position I have two options. Either to simultaneously sell the equivalent amount of the pair (if my broker account permits it) or to sell two times the USD components of the pair. For example, to hedge a 100,000 long EURJPY if I sell 100,000 EURUSD and 100,000 USDJPY what will be the implications for the trade? Under what circumstances can I get a perfect hedge? (Note: use of multiple margins is not an issue).
Thanks