How to hedge?

[lagoona2003]

I don't understand what hedging is and everytime I go to the internet to find an example, all I get are "Come join us in our hedge fund now!" ads. What got me interested in hedging is this post here. If someone could explain to me the concept of hedging or perhaps give me an example of a popular or general hedge, that would be great. Thanks!

[mdetlh]

I read the article, not impressed by the high leverage involved.
Have you read any books about trading?

Best way to make money with FX or futures in general is with trend following or breakouts.

Hedging is taking a position that will guarantee a gain or prevent a loss.

No matter a no commission brokerage says, you will pay in commission in pips
ie $100,000 worth of Euros comes in at $10 per pip.
Look for high difference yielding pairs- AUD/JPY and NZD/JPY for carry trade type income, pretty sexy stuff without hedging and if the market is in the mood for it.

[shadow]

hedging is just have two opposing positions on the same pair. So for example say you go long on the EUR/USD. To hedge it you would go short with a different position. That's really all there is to it

[lagoona2003]

But why would you do that? It's not a gain or a loss.

[shadow]

Ur right. They just make it on the swaps/rollover in that case u have there.

[certicex]

Originally Posted by lagoona2003

But why would you do that? It's not a gain or a loss.

well there is lot more in it and this system is not very easy but very profitable for those who knows how to use it.i´m just testing it for few days with 50.000$ account 3 pairs and in 4 days testing my new balance is over 59.000% which is not bad but if you don´t know how to use it you can end up with empty hands.i wouldn´t recomment this system for newbies cos there is many other systems which are profitable and with very low risk but deffinetly not following the trade but thats one of the options too.

[certicex]

Originally Posted by lagoona2003

But why would you do that? It's not a gain or a loss.

well there is lot more in it and this system is not very easy but very profitable for those who knows how to use it.i´m just testing it for few days with 50.000$ account 3 pairs and in 4 days testing my new balance is over 59.000% which is not bad but if you don´t know how to use it you can end up with empty hands.i wouldn´t recomment this system for newbies cos there is many other systems which are profitable and with very low risk but deffinetly not following the trend but thats one of the option too.

[stucros]

A hedge or to hedge is just a removal of risk. When you take on a position you are generally faced with many different types of risk and if you were speculating you may wish to be only exposed to some and not other therefore you could hedge the others.
I’ve read the post and am highly skeptical all this long short the same currencies doesn’t make sense if he making money then he can’t be long short the same amount of each ccy and has been lucky with the direction of these residual positions. As retail players we get screwed on the carry and the spread is ridiculously large and I’m sure that our brokers make a lot of money from this and use it to lower the pips we pay on spot.
If you just think about the concept he is saying that he is holding no currency and borrowing no currency but yet is receiving interest? There are a lot of very smart people and a lot very stupid people, the former make sure there is no free money out there and I would suggest he is the later!!!!

[pipgod]

Oh,

I thought you were talking about trimming the bushes.
.

[stucros]

Originally Posted by hobbit

Well, it does make sense and it does make money and you should study up on it a little more....



Now I would have to agree with you there...




And here is where I will disagree. Closed minds are useless and if you reject something out of hand without trying it your mind is closed.


Good trading,

hobbit

Hobbit you seem to like to quote me in disagreement but never actually explain yourself?

If i have a position in four currency pairs which is actually in aggregate net flat all those currencies how am i going to be receiving interest? and how will this cover the spread i have to pay on the daily carry aswell as the spread on spot?
I'd like to study up but the school for 'paying my broker for zero risk' seems to be shut!