i have $240 in my account with MT4. I’ve just finished demo trading and gotten a successful hedging system that works for me as a new trader.Please what is the leverage i should trade with to able to have enough funds to hedge my GBP/USD pair and have enough margin to cover it. Thanks.
Now that’s something I’d like to know more about: you can hedge your trades? Could someone briefly explain how? Do you make a smaller trade in the other direction? Doesn’t it eat up the benefit? Thanks for any info.
Off topic: great site by the way, love the lessons- hope you’ll be posting more -(I click on banners instead of crossing fingers)
with a $240 account I hope you are using a micro account. Most experts will say not to expose more than 1% of your account so on $240 that is only $2.40 I will go a little higher on a micro and goto 5%. But remember that the amount of risk you use is only up to you to decide.
As far as hedging goes. Most people think that hedging is buying and selling the same pair at the same time. They think that they can get out at the right time on one trade and catch the other side as it move in their favor. But there is so many problems with this that I don’t have to go into this here. The true sence of hedging is when you buy 2 pairs that move in opposite directions of each other. ie nzd/usd and chf/usd. The idea is that if you buy 1 lot of each pair nzd will go up and chf will go down thus keeping you at a zero profit but you will catch a profit from both pairs on the roll over rate.
Thanks for the explanations Bazooko,
It reminds me of the big JPY-USD carry trade thing. I read that traders are losing interest in that because the Yen has reversed and going back up against the dollar. But by doing what you say a trader can factor out currency volatility and still get the interest rate difference, can’t he? (sorry for the newbie questions)
ah sorry that was just a general comment directed to the admins of Babypips