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Questions and StoriesCategory: QuestionsHow Can Hedging Be Effectively Applied in Trading Forex?
Nnaemeka Victor asked 2 months ago

How Can Hedging Be Effectively Applied in Trading Forex?

My little knowledge about hedging is the trading of the same pair in opposite positions.

Please your answers would be highly appreciated.

10 Answers
Vahid Chaychi Staff answered 2 months ago
Vicaris replied 2 months ago

Ok thanks for your rapid response

Male answered 2 months ago

Many Forex brokers platforms have pairs currencies you can easily select any of them for trading.

Ahmad Khasan answered 1 month ago

Hedging is commonly used to protect value in conventional business. For example, India’s electrical company has a foreign debt denoted in US dollars (USD). But it’s revenue from selling electrical service is in Indian rupee (INR). The company hedges its debt by holding USD currency to avoid the fluctuation of its debt due to the decline of INR value against the USD.
In forex, hedging is commonly used to protect a position from a sudden market move. In this way, the trader opens the opposite position from his current open position. This kind of hedging is called “perfect hedging” since it completely mitigates the risk of adverse market movement.

kenndy4reality replied 1 month ago

Well said.

Gareth White answered 1 month ago

Definitely need to know what you are doing with hedging – a firm grasp of the markets is certainly required otherwise all you’ll be doing is doubling your losses and blowing your account. I personally steer clear of it -if Im not confident in my bias and trade I dont trade.

Eli Davis Keinamura answered 1 month ago

Hedging in forex works like this, lets say you open position on EUR/USD of one lot size of buy or long and it goes against you,you open another order in opposite direction of inversely correlated  currency pair ,this would be USD/CHF . However you have to be careful ,you may double your risk.It is not always correct.

Leno Jean Pierre answered 1 month ago

Any position you open in trading is risky. Hedging is not an exception.

Nnaemeka Victor answered 1 month ago

Thanks for your answers so far. Hedging is not good in forex neither is it good in sport betting. Through hedging, the trader tends to lose money consistently until he/she blows up the account.

Jackson Mugarura answered 1 month ago

Hey, I wasn’t aware that ” hedging” works in forex trading too. I thought that it works in investment consultancy funds only.

Nnaemeka Victor answered 1 month ago

Hi Jaskso, it works in forex

Nnaemeka Victor answered 1 month ago

IN ADDITION, HEDGING IS A TWO EDGED SWORD.

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