EURGBP - Hedging Strategy of the Week (Profit Potential: 200 pips)

[DailyFx]

Currency Pair: EURGBP
Entry Zone: Go both long and short at the market if the price is at any level within the 0.6670-0.6870 range
Protective Stop: Long stop below 0.6550 and short stop above 0.7020
Profit Target: Long Target at 0.6870 and Short Target at 0.6670
Profit Potential: 200 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





Entry Zone -> Go both long and short at the market if the currency is at any level within the Hedging Zone.
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.
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.
The lower the Average True Range, the Less Risky the Currency is for Hedging.


More Low Risk Hedging Opportunities

Currency

% ATR Rank

Stop for Long

Hedging Zone

Stop for Short

Profit Range

EURCHF

|||||| 0.35%

1.6289

1.6420

1.6686

1.6817

266 pips

EURGBP

||||||||| 0.40%

0.6550

0.6670

0.6870

0.7020

200 pips

GBPCHF

|||||||||||| 0.50%

2.3750

2.4200

2.4800

2.5250

600 pips

Medium Risk Hedging Opportunities
Currency

% ATR Rank

Stop for Long

Hedging Zone

Stop for Short

Profit Range

EURUSD
|||||||||||| 0.53%

1.3450

1.3650

1.3850

1.4050

200 pips

CHFJPY
|||||||||||| 0.63%

95.00

98.00

101.00

104.00

300 pips

USDCAD
||||||||||||| 0.74%

1.0000

1.0300

1.0600

1.0900

300 pips

**How is the % ATR Rank Calculated?

The average true range is the 90 days moving average of the currency?s true range. The true range is the greatest of: the difference between the current high and the current low; the difference between the current high and the previous close or the difference between the current low and the previous close.

The %ATR is the relative value of the ATR when weighted against the price. For example, if the ATR for the EURGBP is 26 pips then the %ATR is 0.4 percent since 0.0026/0.6602 = 0.4% where 0.6602 is the quoted price of the EURGBP.


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