Trading forex with hedging

Rambo35

Confirmed PaxForex Representative
Apr 22, 2013
909
24
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Canada
One of the ways to protect your account when trading forex is to use the hedging trading technic. A transaction implemented by a forex trader to protect an existing or anticipated position from an unwanted move in exchange rates is called a forex hedge. Think of a hedge as getting insurance on your trade. Hedging is a way to reduce the amount of loss you would incur if something unexpected happened.
 

Exness Support

Active Trader
Apr 21, 2014
572
1
32
Well hedging for me would be an alternative trading strategy to using stop loss. It is a good risk management strategy and if you are not using stop loss or don't like to see change in your original balance when a trade is in loss then i would say hedging is a good strategy. But one has to be very disciplined with hedging and must know when to take the hedge on and when to take the hedge off.
 

Fxpipper

Master Trader
Oct 26, 2011
1,132
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Yup, one way to support one's position is to hedge the trades..the catch, you need to be really good at this and discipline is a must..no two ways about it.
 

toretton

Trader
Aug 9, 2014
94
0
22
Italy, Milano
I'm sure is the best strategy cuz what can be better on Forex rather than save ur money...There r two basic strategies for hedging through immunization of portfolio and derivatives... Which of them r u using and why?
 

nalu

Confirmed ProfiForex Representative
Sep 3, 2014
59
1
17
Hedging can be helpful when you have clear picture of your trading conditions. It allows you to keep your trade on the market and make money with a second trade that makes profit and so helps you to limit risk. You need to be careful when hedging or else it could be a disaster to your trading account.
 

triplet

Active Trader
Oct 7, 2014
101
4
27
As much as hedging having advantage it also involve huge cost and expenses that can eat away big part of your profits and so to be successful in hedging you need to fund your trade and you have to be patient enough to enjoy your profit.
 

koyl

Trader
May 25, 2015
71
2
7
Hedging is a good strategy it is meant to eliminate risk loss during times of uncertainty when you are trading and use the market to your advantage. And for it to be profitable the trader has to learn how to do it right or accumulate more losses.
 

ProFXManager

Active Trader
Jun 7, 2015
35
1
27
Germany
Hedging is a good strategy for trading but till now I do not apply this strategy. I do not feel that this strategy will maximize my profit.

yes you are right, hedging is primary a security and not a max profit feature
 

ProFXManager

Active Trader
Jun 7, 2015
35
1
27
Germany
Hedging is a good strategy it is meant to eliminate risk loss during times of uncertainty when you are trading and use the market to your advantage. And for it to be profitable the trader has to learn how to do it right or accumulate more losses.

you can do a async hedge, covers your negative swaps, risks and will help you feeling safety.
 

Jesse.muller

Trader
Mar 26, 2015
23
0
7
I've never truly understanded the hedging strategy.
what you're basicly doing is delay the stoploss?
But it takes away margin to keep the positions open?
 

Enivid

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Nov 30, 2008
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If you hedge a spot buy with a spot sell on the same currency pair, then yes. I do not recommend doing that. If you are using some other instruments to hedge a trade, you just transfer risks to different variables, e.g. volatility, or time.
 
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ProFXManager

Active Trader
Jun 7, 2015
35
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Germany
yes an 1:1 hedge is useless, waste time, money and nerves, but if the lot sizes are async, the positive swap side is greater then the negative side, lay back on the beach and cooling down with margharitas :)
as enivid said, the risk is now at vola and time.
 

Enivid

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yes an 1:1 hedge is useless, waste time, money and nerves, but if the lot sizes are async, the positive swap side is greater then the negative side, lay back on the beach and cooling down with margharitas :)
as enivid said, the risk is now at vola and time.
If the positive swap side is greater than the negative side in a combination of hedged trades, then they are not market neutral. Laying back on the beach and cooling down may not be appropriate action in that case.
 

ProFXManager

Active Trader
Jun 7, 2015
35
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Germany
yes, they are not market neutral...and where is the problem? last extrem gaps with >1000 pips are:
2008 all pairs
2011 chf only
2015 chf only
within this long time between, this kind of async hedge gets minimum breakeven, also there are further more trading options available:
-add. counter trades
-add. trend trades
-soft open martingale
-correlation trades (not the best for me)
-close in loss

basic rule: it's better to trade 10 pairs with 0.01 then 1 pair with 0.1 (diversification)
positions with 0.01 (neg swap) and hedge position with 0.03 (pos. swap) should not be a problem,
if so, trading with less balance is useless....

cheers
 

Enivid

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yes, they are not market neutral...and where is the problem?

The problem? The part of the position remains exposed to the usual spot price risk. And you eliminate the potential swap gain with the hedge for the remaining part.

last extrem gaps with >1000 pips are:
2008 all pairs
2011 chf only
2015 chf only

You do not need an extreme gap for position without SL to fail.

within this long time between, this kind of async hedge gets minimum breakeven, also there are further more trading options available:
-add. counter trades
-add. trend trades
-soft open martingale
-correlation trades (not the best for me)
-close in loss

This can be done without hedging too.

basic rule: it's better to trade 10 pairs with 0.01 then 1 pair with 0.1 (diversification)
positions with 0.01 (neg swap) and hedge position with 0.03 (pos. swap) should not be a problem,
if so, trading with less balance is useless....(diversification)

You would also need to make sure that all the 10 pairs are not correlated. Besides, managing "async hedge" on 10 pairs would probably be a hell.
 

ProFXManager

Active Trader
Jun 7, 2015
35
1
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Germany
sorry, what can i say, this all is so wrong...

"And you eliminate the potential swap gain with the hedge for the remaining part."
please dude, do some math!
eu buy 0.01 -1 swap
eu sell 0.03 +3 swap
profit daily: +2 swap
all orders of a symbol (buy+sell) always closed together!!, till tp, ts or be reached!

you need extrem gap to fail!
with buy 0.01 (-swap) and sell 0.03 (+swap)hedge = sell 0.02 = ~20c! you cant fail with 20c per pip!

why shouldnt pairs not correlate? on pair reach the profit, one pair goes hedging, cant see any problem
hell too...most time is swing time...if the swing is over, the async hedge reduces the risk to fail