EUR/USD - Hedging Strategy For 100 pips in Potential Profit

[DailyFx]

§ Currency Pair: EUR/USD
§ Entry Zone: Go both long and short at the market if the price is at any level within the 1.3450-1.3550 range
§ Protective Stop: Long stop below 1.3390 and short stop above 1.3610
§ Profit Target: Long Target at 1.3550 and Short Target at 1.3450
§ Profit Potential: 100 pips (excluding transaction costs and slippage)




The most effective way to capitalize on currencies pairs that are trapped in tight ranges is through the use of hedging. The hedging feature is currently available on all accounts using FXCM?s No Dealing Desk service. For more information on FXCM hedging strategies please visit http://www.fxcm.com/hedging.jsp



The EUR/USD is our primary target for hedging in the week ahead, with clear range-bound trade and concrete support and resistance levels. To hedge, go both long and short at the market if price stays within the above Hedging Zone. Take profits at R1 for longs and at S1 for shorts, covering losses above R2 or below S2.


More Low Risk Hedging Opportunities - Currencies that are Ranging

Currency

% ATR Rank

Stop for Long

Hedging Zone

Stop for Short

Profit Range

EURCHF

|||||| 0.35%

1.6400

1.6505

1.6600

1.6705

95 pips

EURGBP

||||||||| 0.46%

0.6668

0.6750

0.6870

0.6961

120 pips

GBPCHF

|||||||||||| 0.53%

2.4050

2.4268

2.4450

2.4600

182 pips

EURUSD

|||||||||||| 0.54%

1.3390

1.3450

1.3550

1.3610

100 pips

EURAUD

|||||||||||| 0.65%

1.6209

1.6286

1.6443

1.6610

157 pips

Medium Risk Hedging Opportunities - Currencies that are Volatile
Currency

% ATR Rank

Stop for Long

Hedging Zone

Stop for Short

Profit Range

USDCAD
||||||||||||| 0.66%

1.0750

1.0825

1.0888

1.0905

63 pips

GBPUSD
||||||||||||| 0.67%

1.9589

1.9746

2.0071

2.0131

325 pips

AUDUSD
||||||||||||| 0.70%

0.8095

0.8168

0.8357

0.8390

189 pips

CHFJPY
||||||||||||| 0.71%

98.34

98.82

99.14

99.32

32 pips

USDCHF
||||||||||||| 0.72%

1.1920

1.2221

1.2328

1.2555

107 pips

High Risk Hedging Opportunities - Currencies that are Trending
Currency

% ATR Rank

Stop for Long

Hedging Zone

Stop for Short

Profit Range

EURJPY
|||||||||||||| 0.75%

159.61

162.40

164.00

165.00

160 pips

USDJPY
||||||||||||||| 0.77%

118.97

120.53

122.00

122.50

147 pips

GBPJPY
||||||||||||||||| 0.88%

238.50

240.00

241.50

243.00

150 pips

AUDJPY
|||||||||||||||||| 0.91%

98.50

99.50

100.50

101.50

100 pips

NZDUSD
||||||||||||||||||| 0.97%

0.7186

0.7249

0.7330

0.7403

81 pips

NZDJPY
||||||||||||||||||||| 1.22%

85.79

86.70

89.01

91.00

231 pips

Rules for the Hedging Radar



1) Entry Zone -> Go both long and short at the market if the currency is at any level within the Hedging Zone.
2) Profit Taking ->Target for the long order is the top of the entry zone, for the short order is the bottom of the entry zone.
3) Stop Levels are Key Support and Resistance Points -> Place the actual stops a few pips above the higher level and a few pips below the lower level. The break of these levels signals that the ranges have been broken and the hedging strategy should no longer be implemented.
4) The lower the Average True Range, the Less Risky the Currency is for Hedging.


For more information on FXCM hedging strategies please visit http://www.fxcm.com/hedging.jsp