Hi there
Does anyone include hedging in their strategies when trading forex? For example when selling EUR/USD then buying GBP/USD to hedge yourself.
I never hear anyone mentioning this in forex communities but wondering if someone is doing this succesfully.
Feedback will be much appreciated.
Yes, always, for winning and loosing trades, prefer to use a hedge then a stop, and then use a mental stop when I want to unlock the hedge. I prefer to initially hedge a profit then TP a profit, that way you can unlock one side.
Thks for the feedback. Do you mean that you open 1 position, wait for it to move into profit and then hedge it on the retrace? A
Any advice on which pairs hedge best together?
1 - i CANT TELL YOU IF THERES SUCH A THING IF CERTAIN PRICES HEDGE BETTER I WOULD NOT KNOW & i AM NOT SURE IF ITS A VALID QUESTION. DONT KNOW
2 - HEDGE PROFITS MEANING FOR EXAMPLE. IF I AM IN PROFIT 100 PIPS LONG AND I FEEL WE ARE AT A TURNING POINT I WILL PUT A SELL AGAINST THE LONG AND WAIT FOR THE PRICE ACTION TO GIVE ME SOME MORE CLUES.
3 ON ENTRY I MAY TAKE A SHORT BUT IF THATS MY INTENTION SOMETIMES INSTEAD OF USING S/L I WILL LEAVE A PENDING ORDER LONG AS A STOP WHEN ACTUALLY ITS A HEDGE.
NOTE, THESE ARE NOT (ENTRIES,HEDGES & COVER AT RANDOM PLACES)
REMEMBER THE MARKET IS LIKE AN AUCTION, UNDERSTAND WHAT YOUR ASKING OR BIDDING FOR AND AT WHAT PRICE
How to properly use hedging strategy? Before entering hedging, we should analyze first the market. Example, the price of AUDUSD reach 1.0400 after buying position of 1.0500, you already loose 100pips, if you think that the price will go lower, its better to hedge the position by selling same lot volume at 1.0400, so that when the price reach even as low as 1.0000, your loss was not increasing and when the price going up again to 1.0300, you may close your selling position at a small profit before it goes back to 1.0400.
[QUOTE=“veronica007;487291”]
How to properly use hedging strategy? Before entering hedging, we should analyze first the market. Example, the price of AUDUSD reach 1.0400 after buying position of 1.0500, you already loose 100pips, if you think that the price will go lower, its better to hedge the position by selling same lot volume at 1.0400, so that when the price reach even as low as 1.0000, your loss was not increasing and when the price going up again to 1.0300, you may close your selling position at a small profit before it goes back to 1.0400.[/QUOTE]
Selling the same position size as what you bought is also known as closing the trade. 
I thought hedging was not allow in Forex trading in the USA. At least is not allow in FXCM. When I started trading FXCM accounts where in London. Those where the good times. At that moment people could hedge and there was not FIFO rule.
Regarding the hedging, I remember that we could be long in an uptrend and then sell the retracement while still holding our long position and then we could close the profits from the retracement position and the long position will continue making money.
About the FIFO… Ohhh I hate FIFO sooooo much. Let’s say you open 3 lots at different times. You could close whichever lot you wanted to close at any time. So, you could let your profits run.
Then the USA became more regulated and people can’t longer have Forex investments with brokers outside the USA, and now we are not allow to hedge and we are stuck with FIFO.
Please feel free to let me know if I’m wrong about the regulation at this point, because I haven’t check it recently.
Still, I remember that was the way it used to be.
Obviously, what individuals do with their own words is of little relevance to me, but if experience in this business has taught me one thing, its not to abuse market-neutral.
I suppose if you want to pay the spread twice, then sure, start hedging.
I don’t see any real advantage as a speculator to hedging, it’s mainly used by international corporations to protect against account payable’s and receivable’s when exposed to foreign currency fluctuations. Except they use Forwards or options for this type of hedging, and Futures for the small sized businesses who don’t have such good relations with the relevant banks.
Hedging turns your negative risk to cost exposure (staged risk level exposure) into positive risk to cost exposure.
are you talking about positive/negative risk to reward?
never heard about [I]staged risk level exposure[/I]…
I like hEDGES
[QUOTE=“konan;487478”]Price usually comes back to retest important levels that you might have taken the signal in the wrong direction from. If you didn’t hedge but instead closed the trade, you should feel silly.[/QUOTE]
It’s all psychological… Closing the trade versus opening an opposing direction is EXACTLY the same thing… Except for those who need a psychological trick to make them feel less “silly” … Actually, it’s worse because it ties up margin with the hedged position that could be used for another in related trade.
nO IT’S NOT DARN GOSH DA…You close the hedging trade when the price comes back at zero net sum and watch the price on ur original trade go in the right direction…STOP TROLOLO PIZZA
[QUOTE=“konan;487481”]
nO IT’S NOT DARN GOSH DA…You close the hedging trade when the price comes back at zero net sum and watch the price on ur original trade go in the right direction…STOP TROLOLO PIZZA[/QUOTE]
I buy Eurusd at 1.30 … It drops to 1.2950… I’m negative 50 pips.
A. If I close the position I’ve lost 50 pips.
B. I could open a short hedge… Which locks in the negative 50 pips loss as long as the hedge is open regardless of what price does.
Both accomplish the same thing… Except hedging requires double the margin.
What did I say??? You’ve got to assume that at some point the price will go back to 1.30! It’s a freaking cyclical market----I pulled myself from so many jams by hedging and ur gonna teach me now how to trade…? There were no WMD’s!!! Wrong thread but still true!
[QUOTE=“konan;487485”]What did I say??? You’ve got to assume that at some point the price will go back to 1.30! It’s a freaking cyclical market----I pulled myself from so many jams by hedging and ur gonna teach me now how to trade…? There were no WMD’s!!! Wrong thread but still true![/QUOTE]
Yeh… If it goes back to 1.30 then the value of your long position is “0” while the position of your short hedge position is -50 … Youve accomplished the same as closing your long at 1.2950 for a -50 loss.
Lol I’m pretty sure you aren’t bring serious here
Doesn’t matter where I started hedging…I close my short hedge as soon as it hits +1 pips and hopefully the price is coming back for me to BE the long or even to watch it go to 1.31…If I pray hard enough I might get it to 1.32
[QUOTE=“konan;487488”]
Doesn’t matter where I started hedging…I close my short hedge as soon as it hits +1 pips and hopefully the price is coming back for me to BE the long or even to watch it go to 1.31…If I pray hard enough I might get it to 1.32[/QUOTE]
Lol got it
I love hedging to, I used to always take profit in tunnel vision, when I should have hedged and got both sides of the market with out a stop being requred. EU Friday NFP got the short missed the long forgot to hedge, mind set was to tp short and thats what I did and missed a good long trade.