Forex Hedging
When trading, all traders are trying to find the best way to minimize risk and increase profits, one way of doing that is through hedging.
Hedging is when the same trader opens two positions in the opposing directions. So the same trader will open one position going long on a currency pair, and another position going short on a currency pair.
While both positions are open the profit is at zero, but once traders decide the right time to close one or the other then they are ready to go either way (selling or buying) to make the profit.
Hedging is done mainly in foreign exchange trading, because it is flexible and allows the trader the right but not the obligation to buy or sell the currency pair at a particular exchange rate when the time feels right.
When traders choose to hedge they need to analyse the risk of their hedge, and the types of risk they are taking in the position they are opening, and if it is high or low. Then they need to decide how much they are willing to risk, decide on the most effective strategy and then implement and monitor the position.
There are different types of hedging, some much more complex than just direct hedging, and traders can take other approaches when necessary.
Some brokers do not allow direct hedging.
About XtreamForex
XtreamForex is one of the most reputable Forex and commodity Broker Company. XtreamForex Is provides superior forex trading services to all clients. Our company's vision is to grow to be a leading and reliable broker that takes pride in offering the most professional pricing and services to Forex Traders. We are building towards a successful, bright and secure future for our company and are committed to build long-term relationships with our clients.
When trading, all traders are trying to find the best way to minimize risk and increase profits, one way of doing that is through hedging.
Hedging is when the same trader opens two positions in the opposing directions. So the same trader will open one position going long on a currency pair, and another position going short on a currency pair.
While both positions are open the profit is at zero, but once traders decide the right time to close one or the other then they are ready to go either way (selling or buying) to make the profit.
Hedging is done mainly in foreign exchange trading, because it is flexible and allows the trader the right but not the obligation to buy or sell the currency pair at a particular exchange rate when the time feels right.
When traders choose to hedge they need to analyse the risk of their hedge, and the types of risk they are taking in the position they are opening, and if it is high or low. Then they need to decide how much they are willing to risk, decide on the most effective strategy and then implement and monitor the position.
There are different types of hedging, some much more complex than just direct hedging, and traders can take other approaches when necessary.
Some brokers do not allow direct hedging.
About XtreamForex
XtreamForex is one of the most reputable Forex and commodity Broker Company. XtreamForex Is provides superior forex trading services to all clients. Our company's vision is to grow to be a leading and reliable broker that takes pride in offering the most professional pricing and services to Forex Traders. We are building towards a successful, bright and secure future for our company and are committed to build long-term relationships with our clients.