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The "Sure-Fire" Forex Hedging Strategy

This may be accomplished in different markets, such as options and stocks, or in one such as the Forex. This is an simple example of a forex hedging system. Many traders will also use a currency option hedge to mitigate their forex exposure. If ever your stop loss is hit and the new order has not been triggered because price has reversed, place this new order on the opposite side, where price is now headed towards in this situation you will have both a buy stop and sell stop order set up for the same lot size. Ranging, consolidating, and small oscillation markets will kill anyone if not recognized and traded properly you should, in fact, avoid them like the plague!

Home / Forex Strategies / Technical Forex Strategies / Hedging – Forex Trading Strategies Hedging – Forex Trading Strategies Traders of the financial markets, small or big, private or institutional, investing or speculative, all try to find ways to limit the risk and increase the probabilities of winning.


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Strategy Two

Options offer the versatility to set up a variety of hedging strategy Forex risk profiles. This allows you to fully tailor your best Forex hedge strategy to properly suit your attitude to risk. If you want to practise different Forex hedging strategies, trading on a demo account is a good solution. The second two sections look at hedging strategies to protect against downside risk. Pair hedging is a strategy which trades correlated instruments in different directions. This is done to even out the return profile. Option hedging limits downside risk by the use of call or put options. Forex traders can be referring to one of two related strategies when they engage in hedging. Strategy One A forex trader can create a “hedge” to fully protect an existing position from an undesirable move in the currency pair by holding both a short and a long position simultaneously on the same currency pair.