hedge forex positions with no loss

ilqar200

Trader
Sep 24, 2016
4
0
12
39
Hello. Please excuse me for my newbie question. I want to hedge my forex positions (i.e buy or sell ) with other financial instruments with no loss to my capital. Is it possible anyway ? How i can do this if this possible ? Thanks.
 

Enivid

Administrator
Staff member
Nov 30, 2008
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That depends on what kind of position you are trying to hedge. If it is a spot Forex trade, you can manage it with an equal but opposite trade. For example, if you bought 1 lot of GBP/USD, you can hedge it with a sale of 1 lot of GBP/USD. However, what's the point of this?
 

ilqar200

Trader
Sep 24, 2016
4
0
12
39
That depends on what kind of position you are trying to hedge. If it is a spot Forex trade, you can manage it with an equal but opposite trade. For example, if you bought 1 lot of GBP/USD, you can hedge it with a sale of 1 lot of GBP/USD. However, what's the point of this?
You dont understand my question. I dont meant trading. I want to hedge my forex position with other financial instruments or in another exchange with zero loss or at worst with minimall loss .
 

eyeball

Master Trader
Sep 25, 2011
164
12
49
According to financial lore and legend ( and some math nerds too) there is no such thing as a "perfect hedge ", but you can come close. See Investopedia.com or just Google "perfect hedge"
 

Enivid

Administrator
Staff member
Nov 30, 2008
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You dont understand my question. I dont meant trading. I want to hedge my forex position with other financial instruments or in another exchange with zero loss or at worst with minimall loss .
I really don't. That's why I wrote that everything "depends on what kind of position you are trying to hedge." Also, it is important what goals you are trying to accomplish. Because if it is a spot Forex position you are trying to hedge with a minimal loss goal, then an opposite spot Forex position is a perfect solution to your problem. Other options would involve binary options, vanilla options, futures, maybe even bonds. However, they would be inferior compared to hedging spot with spot if the aim is loss minimization.
 

Hafizmd

Active Trader
Sep 22, 2016
77
5
29
43
Kuala Lumpur
First of all, check your broker's policy on Hedging! If your broker does not allow hedge trades, all you profit will be cut and you will suffer from huge losses. Be careful with that.
Practically all the brokers allow hedging. But it's no good for a trader himself... It's hardly possible to get out of hedged position with profit.
 

GazFx

Banned
Nov 13, 2012
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73
74
62
Melbourne, Australia
www.youtube.com
Thanks for the question. I am not holding short and long positions on the same pair. I am trading two positively correlated pairs, like AUDUSD/NZDUSD or CADJPY/GBPAUD for instance. Each pair is assessed for strength and weakness, and based on this I will buy the strong pair and sell the weak pair. I do not see the point in holding both a long and short position in the same pair...you are just delaying the inevitable!
 

GazFx

Banned
Nov 13, 2012
478
73
74
62
Melbourne, Australia
www.youtube.com
Thanks for the question. I am not holding short and long positions on the same pair. I am trading two positively correlated pairs, like AUDUSD/NZDUSD or CADJPY/GBPAUD for instance. Each pair is assessed for strength and weakness, and based on this I will buy the strong pair and sell the weak pair. I do not see the point in holding both a long and short position in the same pair...you are just delaying the inevitable!
That said, I have played with one strategy with lots of merit. The author, Timon Weller, says "If you are planning on using this strategy, be warned, it can backfire. It is not a surefire success strategy and involves skill throughout its complete execution.", but that might be okay if the profits are good and you've made regular withdrawals along the way. It takes some concentration to learn, but worth the effort. Anyway, I want to share with you a video that demonstrates the strategy and let you judge for yourself.