Benefits of hedging for us traders

[wrtm_19]

IMO, you should only bother with hedging if you are a long term trader.
For example, you placed a buy order on USDJPY but it’s just not going your way even though you are “sure” it will eventually turn around due to fundamental reasons but in the meantime it has continued on it’s downtrend. You could consider placing a hedge on a different instrument to sell perhaps the dollar index or some other $ pair. At the point you do that you automatically lock in the loss though. If your hedge turns a profit, then you could set the SL to break even and hope then when price comes back up it closes out the trade and continues up.

What some people do is use options to do this, again, a losing way to trade for most newbies as it is a complex matter.

You could also open up half trades as a hedge while confirming direction, all depends on your strategy. For the most part it’s not a good way to trade and not without a few years experience across the markets.

Thank you San Miguel, thanks to everyone who took the time to post here. After reading all your posts, honestly my original opinion regarding hedging didn’t change at all. I see no real benefit for me, plus as San Miguel stated, yes I find it difficult to practice and more of a killer to me.

Not that I was interested in starting hedging my own positions, but I wanted to know your opinion about this.

[Aaron137]

Thanks for the insight. The pitfalls of hedging appear to be the uncovered open positions.