Hey,
I had a question with hedging. Essentially, you buy and sell a currency at the same time, so Buy 10 lots EUR/USD Sell 10 lots EUR/USD, as an example, or EUR/GBP, as a better example as that has a histroy of range trading. The thought is to pick a point in the range, say a support level, ride it to the top, close one of the legs, then wait for it to hit some resistance, come back down and close the other leg.
My question is this if the whole point is to buy at the bottom and selling a the top, what is the purpose of hedging? Why don't you just buy at the support and sell at the resistance outright? Why take on two positions at once? What is the edge there?
Thanks for your help.
THE HUN.
I had a question with hedging. Essentially, you buy and sell a currency at the same time, so Buy 10 lots EUR/USD Sell 10 lots EUR/USD, as an example, or EUR/GBP, as a better example as that has a histroy of range trading. The thought is to pick a point in the range, say a support level, ride it to the top, close one of the legs, then wait for it to hit some resistance, come back down and close the other leg.
My question is this if the whole point is to buy at the bottom and selling a the top, what is the purpose of hedging? Why don't you just buy at the support and sell at the resistance outright? Why take on two positions at once? What is the edge there?
Thanks for your help.
THE HUN.